Is It about to get easier to buy a home?

If you've been thinking about buying a home – or moving to a bigger one – there’s some good news on the horizon.

While house prices are still rising, the pace is slowing. And crucially, lenders are starting to make it a little easier to get approved for a mortgage. That could mean you’ll soon be able to borrow more, even if mortgage rates stay where they are.

WHAT’S CHANGING

According to the latest Zoopla House Price Index, average UK house prices went up by 1.6% over the past year, taking the typical property value to £268,000. That’s about £4,270 higher than a year ago.

However, the market is cooling down. At the end of 2024, house prices were growing at 1.9% a year, so the pace is definitely easing.

Part of this slowdown is because there are more homes for sale – 12% more than a year ago – which gives buyers more choice and reduces pressure on prices.

At the same time, buyer demand has dipped slightly. The end of stamp duty reliefs and general economic uncertainty (including concerns over new US tariffs) have made some people more cautious.

Still, despite all this, the number of sales being agreed is actually up 6% compared to a year ago, meaning plenty of deals are still getting done.

RULES ARE EASING

One of the biggest shifts happening right now is in how lenders assess your ability to afford a mortgage.

Even though mortgage rates are currently around 4.5% for a 5-year fix, many banks have been 'stress testing' buyers at 8–9%. In other words, you’ve had to prove you could afford much higher repayments – just in case rates shoot up.

That’s been a major barrier, especially for first-time buyers and movers who don’t have large deposits.

Now, things are changing. Some lenders are starting to lower their stress testing levels – back down towards 6.5%, where they were before 2022.

KEY AREAS

House price trends aren’t the same everywhere.

Regions like the West Midlands, the North of England, Wales, and Scotland are seeing stronger price growth – between 2.2% and 3% a year. Northern Ireland is doing even better, with prices up 6%.

These areas also have more affordable homes compared to incomes, which makes it easier for first-time buyers and movers alike.

Meanwhile, parts of southern England – including London and the South East – are seeing much slower growth, often less than 1%. Here, stretched affordability is still a major issue.

MORE HOMES LISTED

Richard Donnell, Executive Director at Zoopla, says: "We’re seeing more homes being listed for sale, which is helping sales activity stay strong. Mortgage lenders adjusting their affordability rules could be one of the biggest supports to the market this year."

Estate agents working on the ground, like Martin Fishwick of Jordan Fishwick in the North West, agree.

"The market has calmed a little after the March rush to beat stamp duty changes, but momentum is still strong – especially with rents rising and mortgage rates more attractive."

Overall, they expect modest house price growth to continue into 2025 and 2026 – but in a more stable, less frantic market than during the pandemic boom.

BUYING OPTIONS

If you’re planning to buy, 2025 could be a good time to make your move – especially if lenders continue to ease stress testing and borrowing gets a little easier.

However, it's still vital to check affordability carefully.

Even if banks offer bigger loans, you need to be confident you can handle repayments if rates rise.

Shop around for mortgage deals. A difference of even 0.5% in rates can make a big impact over time.

And remember to be realistic. While you might be able to borrow more, stick to a budget that leaves you comfortable – not stretched.

The housing market might not be booming like it was a few years ago, but for smart buyers, it could offer new opportunities in the months ahead.

Remember, smart choices start with expert advice – speak to your mortgage adviser to get the best for your financial future.