House price and mortgage rate predictions for 2025

Are mortgage rates likely to go down in 2025?

Right now, if mortgage rates do go down over the second half of 2025 it's likely they will fall slowly due to stubbornly high inflation. According to the OBR, mortgage rates could even go up to 4.7% by 2028, staying at that level in 2029. This is higher than the previous prediction of 4.5% back in October.

The good news is, right now borrowers with a good credit score and decent downpayment could get a mortgage rate of between 4%-5%. And the recent mortgage rate drops could encourage more lenders to slash their own deals to stay competitive. Plus, inflation is expected to gradually fall back to the Bank of England's 2% target despite rising in the short term. If this happens and the Bank is able to drop its base rate to 3.5% by 2030 as it predicts, then mortgage rates could also drop further.

See what rate you could get without applying here.

What will mortgage rates be in 2026?

2026 is still some time away, and a lot can happen in that time. Although there are some mortgage lenders announcing rate cuts, mortgage rates aren't expected to see any drastic cuts in 2025 - instead, they are expected to go down gradually if they do fall. However, if inflation is lower than expected, this could cause mortgage rates to fall quicker in the second half of 2025 and 2026. But, nothing is set in stone, and several key factors could influence mortgage rates in 2026 besides inflation, including how the economy performs, any shifts in housing policy which could impact borrowing costs, or unforeseen global or economic events that alter expectations and market conditions rapidly.

What mortgage rate can I get?

Looking at current mortgage deals can give you an idea of which way the mortgage market is going, but this doesn't give you a clear understanding of what mortgage rate you could get. This is because what rate you could be offered and the mortgage deals you're eligible for depend on your individual circumstances. While predicting precise numbers for mortgage rates in 2025 might be challenging, the easiest way to ensure that you have the best rate for you locked in is to work with an expert, whole-of-market mortgage advisor, regardless of what the market is doing.

At Tembo, we compare your eligibility to thousands of mortgage products from over 100 lenders when you create a free plan. At the end, you'll be able to see all the ways you could buy or remortgage, including indicative interest rates - which auto-updates every month to reflect what's going on in the market.

Plus, if you lock in a rate with our award-winning mortgage team and if rates change down the line, you can also take advantage of our free rate-checking service. Simply get in touch with your dedicated Tembo advisor and they can reapply for you at no extra cost. If rates go up, you'll have already locked in a lower rate! Get started here.

Should I fix my mortgage for longer?

At the moment, there isn't much difference between the average 2 year and 5 year fixed rate deals available on the market. This reflects the fact that lenders are expecting the base rate to drop gradually in response to sticky inflation, with the market anticipating two cuts in the second half of 2025. This is expected to bring the base rate down to around 3.75%. So locking in for longer may not necessarily give you a better deal, but it could be the right choice for your individual circumstances.

As ever, it's always best to seek expert advice on your personal circumstances and what mortgage rates you could be offered. Talking to an expert advisor, like someone from our award-winning team, can help you make an informed decision about whether fixing for longer is the right choice for you.

Are house prices going down in 2025?

House prices are expected to keep going up in 2025 instead of down, but any further rises will be small. The latest figures show that house prices are 1.6% higher compared to a year ago, and are expected to even out at 2% higher over the whole of 2025.

Although the number of sales is at its highest in 4 years, the supply of homes for sale is outpacing the number of sales agreed, meaning that buyers who are taking the leap onto the ladder have much wider choice. Plus, the recent changes in affordability testing have helped some borrowers borrow up to 20% more, helping to make getting on the ladder easier.

Overall, this is helping to keep property prices in check, with house price growth expected to moderate over the rest of 2025 as supply grows and the extra costs of Stamp Duty feed through.

Sellers need to make sure their properties are priced correctly to attract sufficient demand and agree on a sale. Buyers could want the higher stamp duty costs reflected in purchase prices, which could place downward pressure on house prices in 2025.

Is 2025 a good year to sell your house?

Whether 2025 is a good time to sell your house depends on a number of factors, including house price predictions, mortgage rates, and whether the time is right for you. If mortgage rates stay high, putting downward pressure on house prices, this could mean home sellers have to be happy to sell their homes at a lower price than maybe they'd want to in order to attract buyers who are having to absorb higher mortgage costs. If mortgage rates fall, this will make it more affordable to get on or move up the ladder for many buyers, which could cause a surge in buyer demand. If this happens, this could cause house prices to surge.

Being aware of these market changes can help you competitively position your property to reach and appeal to the right buyers. But the most important thing to remember is that timing the market can be very difficult, as there are no guarantees of what will happen. Instead, consider if 2025 is the right time for you to sell, and cater your asking price to accommodate what's going on in the market at that time.

What will happen to house prices in 2026?

What house prices could look like in 2026 will be influenced heavily by how the housing market performs in 2025. House price growth for 2025 is expected to even out at 2%, depending on factors like whether mortgage rates rise, stay at current levels or fall. According to the OBR, house price growth is expected to average 2.5% from 2026 until 2030 but others have put estimates higher at 3.5%. As ever, it's difficult to know for certain, as there are a multitude of factors which impact house prices.

Will house prices rise in the next 10 years?

It's impossible to know for certain what house prices will be, especially for far-off periods in the future like in 10 years’ time. However, it is expected that house prices will rise in the next decade, averaging 2.5% annually, and are predicted by 2029 to have increased 23.4%. However, house price growth varies significantly by location - more affordable regions like the North of England and Scotland tend to outperform the UK average, while in London and the South growth is a lot more muted.

At Tembo, we understand that buying or selling a home can be stressful and uncertain. That's why with a free, personalised Tembo plan, you can compare your eligibility to thousands of mortgages and affordability-boosting schemes. So you can see the true picture of what options are available to you.

Plus, from your first call, our award-winning team will be there every step of the way to provide support and guidance, ensuring that you make informed decisions for your future. Don't let uncertainty hold you back from achieving your dream home - start planning now with Tembo!