Is it a good idea to buy your first home in 2025? This is a question that many ponder. The future is hard to predict, but it can be said that the current market situation seems favourable for first-time homebuyers if their personal finances are in order. Below are five different perspectives to support your considerations.
Garantia’s partnership banks and further information on the mortgage guarantee: Asuntolainatakaus.fi
Your personal situation and finances are decisive
The exemption from transfer tax for first-time homebuyers was removed at the beginning of 2024. At the same time, the housing market was slowed down by interest rates, which seemed high compared to the levels accustomed to in previous years. These factors have contributed to many first-time homebuyers waiting for the right moment to purchase a home.
Many may overthink the optimal time to buy their own home. A home is often bought for years or even decades, reducing the significance of individual economic cycles. It is generally advisable to buy a home when the need is justified by your personal life situation and the purchase is financially possible. Of course, everyone should assess their own employment prospects and take them into account in decision-making.
Homes are significantly cheaper in many locations
Predicting future changes in housing prices is difficult, but it can at least be said that in many locations, homes suitable for first-time buyers are now significantly cheaper than they were two years ago. Therefore, at least it could be said that now it is not the worst time to buy your first home, as there is no risk of market overheating.
Interest rates are already moderate
In 2024, the 12-month Euribor, a common base rate for Finnish mortgages, moved between 3.6% and 3.8% for most of the year. At the time of writing this blog (February 2025), the Euribor is quoted at 2.5%, so we can talk about a rapid and significantly large drop in interest rates.
Of course, when taking out a mortgage, it is advisable to prepare for fluctuations in interest rates, which always occur over a long loan period. You can protect yourself from increases, for example, with an interest rate cap or a fixed rate. Protection is often also available for part of your loan.
You have time to get to know the home before making a purchase decision
At the beginning of 2025, the market situation seems favourable for first-time homebuyers, as there is enough time to get to know the homes properly before making a purchase decision. During the prolonged period of zero interest rates, real estate investors occasionally snapped up small apartments so quickly that potential first-time buyers found themselves hopelessly late. The purchase decision had to be made quickly, which did not necessarily allow for a thorough examination of the home or the housing company.
Homeownership as a means of wealth accumulation
For most households, owning a home is the most significant asset, and for many Finns, homeownership has been a key means of increasing their personal wealth.
When paying off a mortgage, the monthly instalment consists of principal and interest. The principal repayment can be equated to saving, as it increases the net wealth of the homeowner. In contrast, when renting, the rent goes to the landlord and does not accumulate the tenant’s wealth.
Homeowners can also accumulate wealth through the appreciation of the home’s value. Housing prices have risen in the long run, especially in larger cities, although there are regional differences. It should also be noted that past price development is not a guarantee of the future. In addition to market development, factors such as upcoming repair needs affect the value of the home. It is advisable to carefully examine repair needs during the purchase phase.
In summary, if your financial situation allows, buying your first home in 2025 seems like a good option. It is advisable to book a mortgage consultation and consider the purchase of a home more closely. You can find Garantia’s partner banks at asuntolainatakaus.fi.
Ville Korte
SVP, Mortgage Guarantees
The author works as Senior Vice President for mortgage guarantees at Garantia and has over 20 years of experience in mortgage lending at Garantia and in the banking sector.