The Latest Mortgage Trends in the UK 2024

Interest rates, inflation, property prices, regulations, the economy, and even the budget can change the shape of the property market. Every change can affect house prices, lending criteria, and even the willingness of lenders to lend.

Staying abreast of the latest news and trends is essential if you want to purchase a property at the right time and secure the right deal. We can help you do that with our expert mortgage advice service.

Overview of the mortgage market in the UK

In 2023 interest rates and inflation climbed. The cost of living rose steeply, and more property owners fell into arrears. Currently, with elevated house prices relative to income and a continued high cost of living, the following is likely:

Gross lending in the housing market will be £215 billion, that’s a 5% drop
House purchase lending will drop to £120 billion, 8% less than in 2023
External remortgaging will drop to £60 billion, also an 8% drop
Buy-to-let lending will drop by a staggering 53%
Arrears will increase by 30%
Repossessions will increase by 13%

In short, it’s going to be a challenging year with affordability being a central issue.

Legislative and regulatory updates

From April 2024 the Social Housing Act 2023 will come into force. It gives the authorities more powers to deal with landlords failing to meet expected standards. This can potentially cause a decrease in buy-to-let purchases and a tightening of lending criteria. It could mean more properties on the market, increasing supply over demand which equates to a decrease in prices.

This is a perfect example of how one new regulation can affect the market. Any change can affect affordability or willingness of mortgage lenders to lend.

Current mortgage interest rate scenario

Inflation has dropped and interest rates are slowly following. It seems likely that this trend will continue through 2024.

However, as of February 2024, the rate has been maintained at 5.25% and the latest monetary policy report suggests it won’t reduce until the autumn.

Consider a wide variety of mortgage products and options before applying

The good news for homebuyers is that mortgage companies are becoming more optimistic. This is reflected in the increased range of deals offered, especially if you have at least a 5% deposit. There are significantly more mortgage deals available now compared to this time last year.

In recent months lenders have started to launch better deals. For example, Gen H, one of the smaller lenders, is now offering a 3.99% interest rate. However, it’s only available for those with a 60% loan-to-value and does incur a £999 fee. It’s a good sign, other mortgage lenders are likely to follow suit.

Current housing market trends in the UK

Several of the biggest lenders, such as Nationwide and Halifax, have forecasted house prices will drop slightly during 2024. However, Nationwide surprisingly announced that the average house price had increased in January 2024 by 0.7%. That’s a significant difference from the 1.8% drop in December 2023.

Alongside this, the government is talking about schemes to help first-time buyers. It should help to stabilise the market. Of course, the effects will be localised. The location of property will be fundamental to which direction prices move in.

Expert mortgage insights and forecasts

Expert analysis of the market shows that the economy remains the decisive factor for the housing market. The greater the level of business investment, the higher the levels of employment. This leads to market confidence, an increased interest in purchasing property, and more consumers meeting affordability criteria.

A favourable budget for first-time buyers, a buoyant economy, and an easing in the cost-of-living crisis will open possibilities. However, you’ll need to be quick to take advantage of the situation when it arises. That’s why it’s vital you sort your finances today, ensuring you’re ready to strike when the iron is hot.

Summing up

While 2023 was a bad year for the housing market and homeowners, there’s cautious optimism for 2024. Of course, the market can be fickle, it’s essential to be ready now.

The best way to do this is to give our specialist team a call and get everything in place today.