After last year’s rollercoaster of a UK property market, what does 2025 have in store for lenders, brokers and borrowers?

In 2024, the UK property market saw a volatile home-buying market influenced by fluctuating interest rates, rapidly changing swap rates, affordability issues, the impending change to Stamp Duty taxes, the challenge by a lack of new housing and dwindling support for first-home buyers. 

The rental sector remained strong in 2024 despite the challenges in the home-buying market. As affordability pressures and higher interest rates made home ownership more difficult, tenant demand skyrocketed.

The Bridging and Development sector saw a surge in demand driven by a rise in auction sales, rising property prices and the quick access to funds investors and developers need.

Despite the volatility and market uncertainty in 2024, the outlook for 2025 hints at promise, and this translates to opportunities for brokers. Figures forecasted by UK Finance suggest a gradual improvement in affordability.

Forecasts and Predictions for the UK Property Market in 2025

Increased Lending

Gross lending is forecast to rise to £260 billion in 2025, an 11% increase compared to 2024. This is a substantial jump from the £235 billion seen in 2024, which itself was a 4% increase from the previous year.

House Purchase Lending Growth

Lending for house purchases is predicted to reach £148 billion in 2025, a 10% rise from 2024. This follows a modest increase of 11% to £135 billion in 2024. This shows a continuing positive trend in the market, but activity is still expected to be lower than in the decade before 2023.

Remortgaging Rebound

External remortgaging is expected to surge by 30% to £76 billion in 2025. This significant increase comes after a subdued 2024, where remortgaging fell by 10% to £59 billion. In contrast, internal product transfers, which do not require affordability tests, are predicted to grow by a more modest 13%, reaching £254 billion.

Buy-to-Let Challenges

New buy-to-let purchase lending is forecast to decline by 7% to £9 billion in 2025. This is despite a 13% increase to £10 billion in 2024. The predicted decline is attributed to new Stamp Duty surcharges and regulatory hurdles. While the market may decline, brokers will still have options for supporting portfolio landlords, especially within the specialist lending sector.

Arrears Reduction

Mortgage arrears are expected to fall to 99,000 cases by the end of 2025, a 5% decrease from the 104,200 cases in 2024. This promising data point is a result of responsible lending, extensive lending forbearance and a lower unemployment rate. For borrowers whose profile may have changed, leaving them unable to complete product transfers with their existing high street lenders, brokers can turn to specialist lenders like LendInvest for remortgage options.

Stamp Duty Impacts

The changes to Stamp Duty introduced in the Autumn Budget could shape the UK property market in 2025. Home purchases could surge, especially for first-time buyers, in the first quarter before the change takes effect in April. The change in Stamp Duty also puts landlords in front of higher taxes, which could lead to portfolio landlords buying fewer properties and further tightening the rental demand.

Ready to take advantage of what 2025 can bring? Visit our products page or get started in our Mortgages Portal today!