UK Mortgage Trends in 2024

Uk mortgage trends in 2024

Will 2024 be a good year to buy or sell a property? Read on for Goldmanread’s helpful guide to the 2024 UK mortgage and housing market.

2023 was a challenging year for homebuyers and sellers alike, with high-interest rates and the spiralling cost of living making for an uncomfortable ride.

Looking ahead to 2024, many questions hang in the air. Will mortgage rates come down? How will the high cost of living affect the demand for homes? Are we heading for a drop in property prices, or will the market balance out?

In a nutshell, the UK housing market is likely to be subdued in 2024, with house prices continuing to fall up to 4% as the economy remains weak. The good news for buyers is that since peak inflation in late 2023, the mortgage market has become competitive, with lenders offering reduced rates.

This article looks at the emerging trends in the housing market and mortgage rate predictions in 2024. Whether you’re an experienced homeowner looking for your next deal or a first-time buyer, read on for some industry insights to help you navigate the coming year.

Of course, the insights in this article are broad and do not constitute mortgage advice. Your mortgage options are deeply rooted in your personal and financial circumstances. For personalised advice on finding a mortgage in Essex, do not hesitate to call Goldmanread mortgage brokers.

What are the major mortgage trends for 2024?

Experts predict several mortgage trends which will have an impact on the market this year.

1) A more competitive market

Towards the end of 2023, the UK reached peak inflation, causing lenders to reduce their mortgage rates. This has created a competitive marketplace at the beginning of 2024, which is, of course, of great benefit to consumers. It’s especially good news for the estimated 1.6 million borrowers whose existing fixed-rate mortgages are coming to an end this year.

2) Greater buyer discretion

Although expectations are that the housing market will gradually improve, it will not happen overnight. Remortgaging will remain strong as homeowners have no choice but to switch deals when their existing fixed-rate mortgage deals expire. But it’s expected that new purchases will remain constrained.

This means that prospective buyers will prioritise not only affordability but also quality and value for money. For sellers, this means they must make their property as appealing as possible to meet market demands.

3) Fall in mortgage rates

Many commentators note that as we’ve reached the peak base rate, inflation is gradually coming under control. That has resulted in several lenders significantly reducing their interest rates over the past 3 months.

We would expect this to continue through into 2024, though that is by no means a given. At Goldmanread, we are constantly reviewing the market to ensure our customers have access to the most competitive deals available to them.

4) Increasing use of Artificial Intelligence (AI) in the mortgage market

The mortgage market, like many industries, will see an increase in automation this year. There are already some lenders using AVMs (Automated Valuation models) when assessing a property’s value rather than using a surveyor.

AI will also be increasingly used in lender assessment and credit scoring. This makes it more important than ever for borrowers to maintain a good credit score.

What will the housing market look like in 2024?

There have been a number of predictions for the 2024 housing market from lenders such as Halifax and Nationwide. Broadly speaking, they expect the market to remain subdued with an expectation of a fall in house prices of potentially up to 4%. Most property companies anticipate a return to growth in 2025.

However, there is no expectation of a sudden crash in house prices. This is mainly due to sellers being more cautious resulting in a shortage of homes on the market.

The following factors will impact the market throughout 2024:

1) Reduced affordability for borrowers caused by high interest rates

There remains much debate about whether the Bank of England will cut base rates in the face of increasing weakness/recession in the economy. The reality is that interest rates remain much higher than they have over the past 15 years. This will no doubt affect buyers’ affordability and house prices throughout 2024.

2) Economic uncertainty

As we move into 2024, the UK is on the verge of a technical recession. This may cause buyers to be more cautious, which could lead to some stagnation in the housing market.

3) Regional variations

It’s likely that some parts of the UK will be affected more adversely than others, meaning that we may see uneven growth in the UK market throughout 2024. To put it into context, in 2023, house prices fell by 1.8% in the UK. However, East Anglia saw the biggest fall in house prices at 5.2%, while Scotland saw a growth of 0.6% – quite some margin.

What will homebuyers be looking for in 2024?

So what does this mean for sellers in 2024? Given the above predictions and trends, homebuyers are likely to be more discerning in their property search this year. This means they will be more likely to look for properties that stand out from the crowd and offer good value for money. Other factors that may influence homebuyers this year are:

1) Affordability and sustainability

Buyers will continue to prioritise affordability, not only in terms of the monthly mortgage repayments but also the overall running costs of a property. As energy prices have soared, more buyers will seek properties with green and sustainable features. Energy efficiency, sustainable construction and minimal environmental impact will play an increasing role in buyers’ decision-making.

2) Flexible accommodation

Due to the huge rise in home working in recent years, homebuyers in 2024 will continue to look for flexible and adaptable accommodation. Well-organised layouts, potential home office space and efficient storage solutions will be high on the wish list of many buyers.

3) Competitive pricing and flexibility

Naturally, buyers will be looking for competitive prices and will require increasing flexibility from sellers. For sellers, this may mean negotiating the selling price or being willing to accommodate specific requests from potential buyers, like property improvements.

4) Upside potential

Buyers in 2024 will also be mindful of their long-term investment and will be looking for homes that offer built-in upside potential, i.e. properties in areas with high demand, a strong and stable market, good infrastructure, location and amenities.

How do mortgage rates affect house prices?

In simple terms, as the interest rate falls, mortgage rates fall, and affordability increases for most buyers. This leads to a rise in demand and higher house prices.

When the interest rate and mortgage rates go up, the opposite happens – affordability goes down, demand decreases, and house prices fall.

Mortgage rate predictions 2024

Now for the most asked question… what is the 2024 mortgage rate forecast?

High inflation and living costs resulted in the Bank of England raising interest rates to a 14-year high in 2023, which led to the average mortgage rate sailing past 6%.

The truth is that mortgage rates remain largely unpredictable as we move into 2024. Inflation is falling, although various members of the Bank of England’s Monetary Policy Committee (MPC) have reiterated that whilst inflation is starting to fall, it remains embedded in the economy, and consumers should not expect to see rapid base rate falls.

The strength of the UK economy remains weak, with December 2023 figures showing that the economy may have entered a technical recession. This may put pressure on the Bank to start reducing base rates, though any cuts are likely to be subdued.

Will UK mortgage interest rates go down in 2024?

Whether interest rates and, therefore, mortgage rates will fall in 2024 remains uncertain. It depends on many factors, most significantly:

1) Inflation – If inflation continues to fall, the Bank of England may feel more confident about cutting base rates. The rate of these cuts will depend on the level and speed of any fall inflation. If we are approaching a period of negative inflation, or deflation, it’s likely rates will be cut more rapidly.

2) Economic growth – Figures published in December 2023 show that the UK economy is even weaker than expected. The key aim of the MPC is to keep inflation under control despite the impact of high base rates on the economy. However, they will likely face some political pressure to cut rates if the economy continues to weaken.

Will 2024 be a good time to buy a house in the UK?

There is no ideal time to purchase a property, but it’s important to keep in mind that whenever you decide to make the move, you should consider the property as an asset that you intend to hold for a medium-term period, usually spanning 5 to 10 years.

Whatever the market conditions, the most important factor to consider remains affordability. That applies not only to the monthly repayments but also to the running costs of the property. An experienced mortgage advisor and broker like Goldmanread will help you assess your affordability and ensure you are comfortable with the monthly costs.

Looking for mortgage advice? Get in touch

At Goldmanread, we have been advising all sorts of homebuyers for 15 years, through bad times and good. 2024 is set to be a time of economic uncertainty, so it’s important to get professional advice if you are seeking a mortgage this year.

As mortgage experts, we have a close eye on the market and can provide professional advice based on market activity as well as your personal circumstances.

Please feel free to get in touch for mortgage advice in the Essex area.

Clive Read
Clive Read

Clive Read is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.

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