A relaxation in how lenders assess mortgage affordability should serve to boost buying power by between 15-20%, Zoopla has predicted in its UK House Price Index.
The average 5-year fixed rate mortgage costs around 4.5% today, but many lenders still stress test at between 8-9%. If they return to 6-7% that would give more buyers a route into the market.
Zoopla reckoned the Bank of England is likely to lower the base rate at least one more time this year from its current level of 4.5%.
Despite this being possible, economic uncertainty triggered by US President Donald Trump’s on-off tariffs is expected to keep a lid on demand this year, keeping transactions in line with 2024 levels.
Annual UK house price inflation stood at 1.6% in March, down from 1.9% in December 2024.
Tom Bill, head of UK residential research at Knight Frank, said: “Supply has risen more quickly than demand in recent months, which has put downwards pressure on house prices.
“The stamp duty cliff edge put off some prospective buyers but we expect demand to catch up now there is a level playing field and the weather is improving.
“The tariff turbulence may also help because the Bank of England is expected to cut rates more proactively to support the economy, which means Donald Trump has made UK mortgages slightly cheaper.”
Toby Leek, president of NAEA Propertymark, said: “Improved 2-year mortgage products, greater borrowing power and sustained confidence are all playing key roles in helping raise the number of homes for sale and boost overall momentum within the housing market.
“Alongside the fact that the spring and summer months are proven to be historically busier times of the year, many of those who are waiting in the wings due to riding out current global economic uncertainty and the continued journey in interest rates cooling may be finding it difficult to resist the broad range of properties available coupled with their improved financial status.”
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