House price growth is expected to slow in the coming year, despite recent increases, as a combination of economic factors and a record number of homes on the market put downward pressure on prices.
Edward Allenby of Oxford Economics forecasts a softening of house price growth over the next twelve months. this anticipated slowdown is attributed to several converging economic pressures, including a projected deceleration in household income growth. Factors contributing to this include the impact of higher inflation, the implementation of tighter fiscal policies, the freezing of tax thresholds, and the potential for increased taxation.
In the first quarter of 2025, year-on-year house price growth stood at 5.5 per cent. However, this figure may not fully reflect the underlying market dynamics that are poised to influence future price movements.
Adding to the downward pressure on prices is a important oversupply of homes available for sale. Zoopla reported this week that approximately 553,000 properties are currently on the market, marking a record high.Richard Donnell from zoopla highlighted that this elevated supply is actively hindering price growth, with 12 per cent more properties listed compared to the same period last year. “This supports a ‘buyers’ market’ were there’s plenty of choice and offers can be competitive,limiting house price increases,” Donnell stated.
Remortgaging Opportunities Emerge
for homeowners whose mortgage terms are nearing their end, the current market presents a favourable opportunity to explore new deals. Significant reductions in mortgage rates for those looking to switch lenders have been observed. According to Gettins, the disparity between rates offered to first-time buyers and those remortgaging has narrowed considerably in the past six to twelve months. Banks are demonstrating increased competitiveness for both remortgaging customers and those moving home,a positive advancement for individuals whose current deals are maturing.
Analysis conducted by L&C reveals that the lowest available two-year fixed remortgage rate has fallen to 3.79 per cent, a decrease of 0.17 percentage points as the beginning of May.This rate is now closely aligned with rates for new buyers, with the lowest two-year fixed mortgage rate for buyers at 3.76 per cent, representing a 0.22 percentage point drop from the equivalent rate in May.
Industry experts suggest that the high volume of remortgaging activity is driven not only by the availability of more attractive rates but also by a confluence of borrowers coming off their two and five-year fixed-rate mortgages concurrently. Chris Sykes of mortgage broker MSP Financial Solutions explained, “There have been a series of events that have led to a big remortgage year.” He elaborated, “You probably fixed at five years in covid before rates rose, and then those getting mortgages two years ago when rates went really high after the Truss budget would have fixed for two years hoping rates would come down.”
