Experts warn recovery may be gradual despite easing borrowing costs

Falling mortgage rates are bringing much-needed relief to UK borrowers, but analysts caution that lower borrowing costs alone may not be enough to spark a full housing-market revival. The recent reductions have helped improve affordability, and many potential buyers who stepped back earlier in the year are now reconsidering their plans.

Lenders cutting fixed-rate deals has already encouraged more enquiries and applications, and industry forecasts suggest borrowing and remortgage activity is likely to increase in 2025. This trend signals a gradually improving sentiment rather than the surge seen during earlier property booms.

However, challenges are still limiting the pace of recovery. Cost-of-living pressures continue to affect household budgets, which can make buyers hesitant even with cheaper mortgage options. Broader economic uncertainty is also dampening confidence, and some households remain nervous about taking on long-term debt in the current climate.

Another factor weighing on the market is the stock of homes with reduced asking prices. Many sellers are adjusting expectations after months of slow activity, and this price sensitivity means that even with lower rates, buyers are not rushing in at the scale some might expect.

Forecasts for house-price growth remain modest. Analysts expect increases to be steady rather than dramatic next year, and some regions may continue to see stagnant or slightly falling prices. The overall picture is more consistent with a slow stabilisation than a quick rebound.

Market observers say that while declining rates are restoring momentum, other elements — including wage growth, inflation levels, and government policy decisions — will play major roles in determining the strength of the recovery. Without improvements on several fronts, the market is unlikely to accelerate sharply.

For first-time buyers, eased rates offer a valuable opening, especially after a difficult period of high mortgage costs. But even this group may need further financial breathing room before confidence returns fully and transaction volume rises meaningfully across the market.

For now, the consensus is clear: falling mortgage rates are a necessary step toward revival, but not a sufficient one. A steadier market is emerging, yet a full-scale turnaround will depend on wider economic progress rather than rate cuts alone.