Some lenders have predicted that falling mortgage rates and rising wages should improve housing affordability during this year.

UK Finance, the lenders’ trade body, has forecast a 10% rise in mortgage lending for house purchases during 2025, although some analysts have already questioned this prediction as optimistic for lenders.

Further ahead, it is expected many people will again find it tough to afford to move or buy a new home in 2026.

Eight in 10 mortgage customers have fixed-rate deals. The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it.

Even if mortgage rates fall this year, rates will still remain higher than many homeowners are paying on the current fixed deal.

The Bank of England estimated that about 4.4 million mortgage holders are expected to see payments rise by 2027.

It said a typical owner-occupier coming off a fixed rate in the next two years would see their monthly mortgage repayments increase by around £146.

Nationwide’s house price data is based on its own mortgage lending, which does not include buyers who purchase homes with cash, or buy-to-let deals. Cash buyers account for about a third of housing sales.

Rival lender, the Halifax, will publish its final 2024 data in the coming days.