16 April 2025
If you are covering the latest UK house price index, please see the following comment from Karen Noye, mortgage expert at Quilter
“February’s house price figures show the market holding steady on a monthly basis, but still growing firmly on the year. The average UK home remains valued at £268,000 unchanged from January, while annual growth has climbed to 5.4%. This suggests a housing market that continues to defy expectations.
“First-time buyers paid an average of £227,000 last month, up 5.6% annually, while former owner-occupiers paid just under £330,000. That widening gap reinforces the affordability challenge facing those trying to step onto the ladder. Meanwhile, the sharp 28.7% annual surge in new build prices, compared to just 3.2% for existing homes, risks compounding that issue, particularly if developers focus on premium stock that pushes buyers towards increasingly stretched borrowing.
“Still, activity is picking up, with residential transactions up 28% year-on-year. Lenders are starting to respond, with mortgage rates edging down as financial markets anticipate further interest rate cuts. Average fixed rates are now drifting downwards, and in some cases below 4%, thanks in part to falling swap rates which is the key measure that lenders use to price their deals.
“The changes to swap rates are a result of the continuing global economic uncertainty. With Donald Trump upending financial markets as a result of his tariff plans, markets are increasingly betting that central banks will need to do more to support their economies. That’s putting downward pressure on swap rates and strengthens the case for the Bank of England to continue cutting UK interest rates later this year.
“While house prices have picked up in recent months, the outlook remains mixed. Regional differences are stark — with the North West seeing 8% annual growth while London lags at 1.7% — and affordability pressures haven’t gone away. But if mortgage rates continue to ease and confidence builds, this spring could mark a turning point for both buyers and sellers.”
