Quarterly Update: News from the Property Market

What’s happening in the housing market, and what’s on the horizon for the rest of 2025? Let’s look at the latest property news.

Base rate decision

The Bank of England’s Monetary Policy Committee took a steady-as-she-goes approach to interest rates when it met last month.

The committee held the base rate at 4.5%. Bank Governor Andrew Bailey said he still thinks “interest rates are on a gradually declining path”.

Good news on the mortgage front

While there was no movement on the base rate, there was in the mortgage market, where rates fell by their biggest margin in months.

Many lenders now offer sub-4% deals (on 60% LTV mortgages).*

However, there was also a reminder to always read the fine print on any deal. One lender’s 3.99% offer came with an arrangement fee just short of £2,000 – about £1,500 higher than similar products on the market.

And, if you spot a good deal, be quick. Deals had a 16-day shelf-life in March, compared to 36 days in February.

Price growth

Proof that residential property continues to be a strong and stable investment came in the form of new data from Savills.

It showed that the UK housing market grew by £22.3 billion last year to £379 billion.

Lucian Cook, head of residential research at Savills, attributed this 6.3% increase to stability in the mortgage market.

He predicted that property would continue to perform strongly in 2025.

“Further interest rate cuts expected this year will mean that the range of buyers coming to the market will widen, and we can expect to see their spending power pick up over the next 12 months,” he said.

First-time buyers are up, cash buyers are down

The Savills data also showed that in 2024, there was a significant increase in the use of mortgage debt to purchase property (up by £24.3 billion). This trend was particularly prevalent among first-time buyers.

In contrast, cash buyers spent £8.4 billion less. 

Mr Cook said: “The rise in first-time buyers reflects the overwhelming desire of Britons to get a foot on the housing ladder. 

“As a result, those who have been able to pull together a deposit have continued to take the plunge, despite higher house prices and mortgage rates.”

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* Interest rates are always subject to change.