Market Updates - May 2025
Hello!
Welcome to my latest blog on the wonderful world of property. I’m a little late with this one so please forgive me - May was a busy month!
I always find it useful checking the data from various sources. It’s easy to get caught up in anecdotal evidence about the property market. For example, I know of a couple of developers struggling to sell their high-end developments but it’s hard to tell why. Is it their product? Their local market? A bad time of year? Even an unruly neighbour could be having an impact.
That’s why I always come back to the cold, hard data to look at market trends. Data can’t guarantee you will achieve the average but it can certainly help you forecast as accurately as possible, rather than expecting “Jim down the pub” to be right about what a property might sell for!
I thought I would start this month’s update by looking at the mortgage market. Mortgage interest rates have a huge influence on the UK property market, despite only about a third of UK properties being mortgaged. Lower rates always see spikes in activity (in terms of both sales and purchases) and quiet spells tend to correlate with higher interest rates.
As shown by the tables above, average rates for 2- and 5-year fixed mortgages are in the region of 4.6%, with the lowest available somewhere around 3.8%.
What’s clear is that interest rates have been steadily declining over the past year with 2-year fixes down a considerable 0.79%.
It’s worth bearing in mind that interest rates are not the only factor for a borrower to consider. Product fees (or ‘arrangement fees’) can be a significant cost to consider. Usually they range between 1-5% but, in recent times, have reached closer to a whopping 10%! Because these are often added to a loan it’s easy to forget them but they’re a critical consideration when calculating the cost of borrowing.
From personal experience, I have found that interest rates have been declining pretty reluctantly over the last year or so. Forecasts suggested product fees would decline more quickly as lenders fight for business but they’ve not reduced dramatically by any means.
Nonetheless, interest rates and product fees are moving in the right direction. Whilst I don’t think we will see any of the mega-low interest rates of a few years ago any time soon it’s encouraging to know that lending is getting marginally cheaper all the time.
The reason I started this month’s update with a look at the mortgage market is because it’s been credited as stimulating growth in the property market. As you can see from the graph below, there’s a clear correlation between the number of mortgage approvals and the number of sales agreed.
According to Hometrack, it’s been the strongest May in the property market since 2021 with the number of sales agreed up by a significant 6% compared to the same time last year. Some areas are significantly more active with the North West seeing a massive 14% increase.
This trend looks set to continue in an increasingly active market with the number of properties listed up by 13% compared to last year. so there’s clearly more people deciding the time is right to move on.
It’s a good time to sell up with 97% of sellers achieving their asking price. As of April, the average UK house price was 1.6% higher than a year ago so there’s been a steady increase.
All pretty positive news really pointing to a strong and sturdy property market!
That’s all for now. I’ll be back next month with some updates on my own projects. Have a great month in the meantime and thanks for reading.
John