2023 unfolded as a turbulent year for the property market, still grappling with the aftermath of a mini-Budget that sent mortgage rates soaring and cast a shadow over consumer confidence. The year’s narrative, however, took a positive turn as inflation gradually receded, casting a brighter hue on the real estate landscape.
In the waning months of 2023, a welcomed breeze of relief swept through the market as lenders began to consistently trim rates. While the reductions may not have been monumental, they nonetheless injected a renewed vigor into the property market, lifting the spirits of borrowers.
January ushered in a surge of optimism as major high street lenders boldly announced substantial rate cuts from the second day of the month. This was especially good news for those on the lookout to buy a home or the approximately 1.4 million individuals poised to transition from ultra-low fixed rates in 2024.
The momentum of these meaningful rate cuts persisted until the emergence of December’s inflation data, which revealed a marginal increase, albeit only to 4%. This uptick introduced a touch of uncertainty regarding the trajectory of mortgage pricing.
At the time of writing in mid-February, we find ourselves navigating a yo-yo mortgage market. Some major lenders, including Santander, are reducing rates, while others are making slight increases. A few are adopting a cautious stance, keeping a watchful eye on the next decisions of the Bank of England Monetary Policy Committee.
The prevailing consensus among economists points to an initial cut to the base rate in the first half of the year, possibly in May or June, with expectations of further reductions in the latter part of the year. However, that first cut could possibly come sooner now given that the UK went into a technical recession during the fourth quarter of 2023 and that inflation did not rise as expected in January.
Once the eagerly awaited base rate cut materializes, mortgage rates are anticipated to witness a significant drop, propelling the property market back to life. It’s important to note that the market didn’t experience a freefall in 2023. According to the Halifax, house prices saw a 1.3% increase in January as demand surged and mortgage rates declined. Over the past 12 months, the Halifax reports a 2.5% rise in house prices.
In the interim, my advice to borrowers is not to procrastinate in securing a rate, given the market’s volatile nature. A great rate today might not be available tomorrow. Overall, my outlook for 2024 is optimistic. when that first base rate comes, we could witness a swift transition from a buyers’ market to a sellers’ market almost overnight. So, buckle up for what promises to be an exciting journey in the world of property.
Katy Eatenton is a Mortgage & Protection Specialist at Lifetime Wealth Management and Premier Magazine’s regular Financial Columnist
Tel: 01932 216045
weybridge@lifetime.co.uk
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This article will appear in the spring edition of Premier Magazine. You can browse the current edition HERE
