It is ‘vital’ consumers remain optimistic about property market momentum as an expected fall in net borrowing in February compared to January has been reported in the latest Bank of England (BoE) Money and Credit report. Net borrowing decreased £900m in February having risen £800m in January 2025. The result is the annual growth rate for net mortgage lending was little changed at 1.9% in February say BoE.
Given the imminent arrival of the latest stamp duty deadline at the end of March, February’s figures show an increase in gross lending to £24.3bn from £21.7bn in January – the highest since £24.9bn in November 2022.
A 1% decrease in the number of net mortgage approvals, down 600 to 65,500 followed a similar increase of 400 in January. Approvals for remortgaging (which only capture remortgaging with a different lender) decreased by 800 to 32,000 in February, following an increase of 2,100 in January.
Commentators agree market dynamics are positive with sentiment measures broadly going in the right direction. Property portal Zoopla say they still believe the market will achieve 1.15m transactions in 2025, 5% up on 2024. With sales up 5% on the same time last year Executive Director at Zoopla Richard Donnell says he expects mortgage approvals to recover toward 80,000 per months as the market returns to normal.
“Mortgage approvals have slowed in the wake of the rush to beat the stamp duty deadline and are now recovering after the seasonal slowdown over December. Zoopla’s latest data shows that sales agreed are up 5 per cent over the last year with more sales agreed driving continued demand for mortgages to fund sales”
On the latest BoE figures Nathan Emerson, CEO of estate agency membership body Propertymark, adds:
“With the wider global economy seeing upheaval, many people remain cautious about how this might affect aspects such as the rate of inflation and base rates domestically. Although overall, we are seeing an encouraging level of growth year on year within the housing market, it is vital consumers feel confident enough to approach a potential house move when looking at their affordability. We have seen a strong start to the year overall, and as we head further towards the summer months, we remain optimistic to see further market momentum. It does, however, remain imperative that the rate of inflation remains closely aligned with the initially set target of 2 per cent before the Bank of England will likely consider any new base rate cuts.”
With lending rates static according to Rightmove’s weekly mortgage tracker, Matt Smith, Rightmove’s mortgage expert says the short term outlook remains positive. The average two year fixed rate is 4.87% and five year fixed rate mortgage is 4.73% – unchanged on the previous week less than a 1% change year to date. A second BoE interest rates cut of the year might push demand up again, with Smith concluding
“As stamp duty deadline day arrives, average mortgage rates have remained steady since last week’s Spring Budget and unexpected drop in inflation rate. The lowest available mortgage rate is still a 2-year fixed deal at 3.86%, for those with the largest deposits, as the short-term outlook for rates remains much improved compared with last year. However, the markets are currently less certain about a second Bank Rate cut of the year in May, which may get pushed to June. Once a cut does happen, it could help to push forward further mortgage rate cuts from lenders.”
