British homebuyers waiting for interest rates to drop may find themselves worse off financially, mortgage adviser Alexander Hall has warned.
Research from the adviser revealed that mortgage rates are forecast to fall, reducing from the current average of 4.27 per cent to 3.63 per cent by the end of the year.
On the face of it, the interest rate cuts mean the average homebuyer would see a saving of £37 a month or £900 over a two-year fixed-term.
But advisers have said that these potential savings could be negated by house price rises.
According to analysis by Alexander Hall, the average value of a UK home is set to climb by 3.5 per cent by the end of the year, rising to to £277,470 compared with £268,087 today.
Choosing to wait it out could see you pay more for both a mortgage deposit and in stamp duty
Stephanie Daley, director of partnerships at Alexander Hall, explained that with stamp duty due to increase by £2,500 on the April 1, there was a temptation for those currently sitting on the fence to stay put a bit longer.
However, the company’s research showed that doing so could mean they are worse off.
Waiting until the end of the year to purchase a property could see homebuyers pay £2,346 more in mortgage deposit costs and stamp duty; this is compared to the £900 they could save on a two-year fixed-term mortgage.
Daley said: “While we’re still a [couple of] weeks away from the stamp duty deadline, unless you’re nearing the end of your purchase, you’re unlikely to complete before April 1, and this means you’ll need to pay a higher rate of stamp duty.
“2025 is forecast to be a far more buoyant year for the housing market. With house prices likely to climb, you may well find that choosing to wait it out could see you pay more for both a mortgage deposit and in stamp duty, versus the savings you’re set to make on your mortgage repayments.”
She said it was “good news” that many lenders were already reducing their rates due to the greater degree of market positivity that has materialised so far this year.
Alexander Hall is recommending its clients to act now, to secure a more favourable rate and avoid any future increases to purchasing related costs.”
Heightened mortgage activity
This comes as James Enos, national account manager, at Hodge Bank said brokers have reported a solid level of market activity in 2025.
He said: “It will be interesting to see whether the early activity we’re witnessing is simply a seasonal bounce or the beginning of more sustained momentum in the property market.
“Consumer confidence [is] playing a crucial role in shaping the housing market in 2025, and we will be closely monitoring these trends in the months ahead.”