A recent study reveals that over two-thirds of º£½ÇÊÓƵ mortgage brokers anticipate interest rates to cease their downward trajectory and begin rising again by the start of next year.
Butterfield Mortgages conducted a survey of 300 brokers, with 69 per cent predicting that the Bank of England base rate would exceed its current level of 4.5 per cent by the onset of 2026, as reported by .
Over 28 per cent of brokers forecasted that the base rate would reach 5.25 per cent by the beginning of next year.
This survey sharply contrasts with current speculation about further cuts from the Bank of England, which has reduced interest rates three times in the past six months.
Several lenders had already anticipated further cuts, with Santander aiming for rates of 3.75 per cent by year's end. Analysts at Barclays and Morgan Stanley were more bullish, projecting rates as low as 3.5 per cent.
However, Goldman Sachs went a step further, suggesting interest rates would drop to 3.25 per cent by June 2026. Alpa Bhakta, Chief Executive of Butterfield Mortgages, described the results as "surprising" given the current sentiment around rates.
"This underscores the need for lenders to stay ahead of the curve – our research points to a clear demand for expert guidance in navigating the increasingly complex regulatory and tax landscape.
"Specialist lenders must utilise their network of regulatory and tax experts to help brokers support property investors to make confident decisions about their portfolios in the coming months."
Stamp Duty changes will 'complicate' market
Changes to Stamp Duty are set to 'complicate' the market, according to a majority of brokers. 67% of brokers anticipate that interest rates and borrowing costs will be the most significant factors influencing the property market's performance in the coming year.
The report noted that brokers are also contemplating how government policies related to property regulations and tax will impact the market.
Changes to the Stamp Duty allowance, announced by Chancellor Rachel Reeves in her Autumn Budget, were identified as the most disruptive policy by brokers.
From 1 April, the threshold at which first-time buyers start paying the tax will revert to previous levels, dropping to £300,000.
The stamp duty threshold for all other buyers is also returning to its former level – the nil rate level will decrease from £250,000 to £125,000.
Buyers will then have to pay 2% on the portion between £125,001 and £250,000 and 5% on anything between £250,001 and £925,000.
Butterfield's study found that 64% of brokers believe the changes due in April will make the property investment landscape "more complicated to navigate."
House prices jump ahead of changes
The impending deadline has prompted buyers to rush to beat the threshold changes.
Santander º£½ÇÊÓƵ reported a 130% increase in mortgage applications in the fourth quarter of 2024, as buyers sought to avoid increased costs.
According to the Halifax House Price Index, the average house price rose by 0.6% in January to £298,815.
In February, prices saw a slight decrease of 0.1 per cent, equivalent to a £213 loss, as buyers were eager to beat the April deadline.
The sustained high prices, fuelled by Stamp Duty concerns, indicate a 2.9 per cent annual growth on the index.
Rightmove suggests that 25,000 first-time buyers and 74,000 home movers in England may not be able to finalise their transactions before the changes take effect.
Matt Smith, Rightmove's mortgage expert, commented: "As the stamp duty deadline edges nearer, we expect a rush to complete from those in the process of buying a home, particularly from affordability stretched first-time buyers eager to avoid unnecessarily parting with thousands of extra pounds."
