13-02-2025

Mortgage News

Lenders Respond with Sub 4% Rate Reductions:

Following the base rate cut, major lenders such as Barclays, HSBC, and Nationwide have swiftly reduced their mortgage rates.

Several lenders are now priced at just below 4% for 5 years fixed rate.

These reductions reflect a competitive market response to the Bank of England’s decision and falling money market swap rates.

Warnings for Borrowers on Standard Variable Rates (SVRs):

Nearly 700,000 mortgage borrowers on standard variable rates (SVRs) have been warned they could be overpaying by more than £5,000 annually in interest. The average SVR among major lenders like Lloyds, HSBC, and Santander stands at 8.24%, compared to an average two-year fixed rate of 4.68%.

Housing

House Prices Reach Record High:

Halifax reported that UK house prices hit a new record high of £299,138 in January 2025, driven by strong demand for new loans. This increase comes ahead of a stamp duty change in April, where the threshold for first-time buyers will drop from £425,000 to £300,000, potentially impacting affordability. Despite the base rate cut, Halifax predicts that mortgage rates will likely hover between 4% and 5% throughout 2025, influenced by global financial markets and domestic monetary policy

Housing Hotspots

Cardiff’s CF24 postcode topped Paragon’s 2024 buy-to-let landlord list, driven by student demand in Cathays and Roath. Birmingham’s B29, home to Selly Oak and the University of Birmingham, ranked second with 7.5% rental yields. Plymouth’s PL4 followed, offering 9.6% yields and catering to students and key workers. Other hotspots include Leeds (LS6), Nottingham (NG7, NG3), Manchester (M14), and Gloucester (GL1). Terraced houses dominate investor preferences, delivering strong yields in high-demand cities, according to Paragon’s Neil Smith.

Prime London Thrives

Benham & Reeves reports prime London properties averaged £2.75m in 2024—438% above the city’s norm. Fulham’s SW6 led with 102 sales above £2m, followed by Chelsea (SW3) and Barnet (NW3). The W1B postcode, spanning Regents Park to Piccadilly, fetched £6.225m on average. Tower Hamlets’ E1 saw the highest premium, with £2m+ homes 648% above the borough average. Director Marc von Grundherr emphasised sustained high-end demand across the capital.

Northern England’s Property Boom

UOWN predicts Northern England house prices will outpace the South, with a 5% rise in 2025 and up to 29.4% by 2030. Leeds anticipates 28% growth, Sheffield offers 7% yields, and Skelmersdale sees rapid gains. Haaris Ahmed of UOWN highlights affordability and demand as key drivers, despite stamp duty and regulatory challenges.

Social Housing Boost

Labour’s ‘grey belt’ initiative could deliver 800,000 social homes, per Ceres Property. The West Midlands leads with 155,295 potential units, followed by the East of England and Southeast. John McLarty stresses the policy’s transformative potential, provided execution matches ambition.

Economy

Chancellor Rachel Reeves is engaging bank leaders like HSBC’s Georges Elhedery and Lloyds’ Charlie Nunn to bolster Labour’s financial growth strategy, urging regulators to ease economic barriers.

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