Key mortgage insights heading into 2024 - Partners Wealth Management

The last few years have been particularly challenging for the mortgage market – but we are pleased to see tentative signs of recovery as we head into 2024.

Interest rates appear to have peaked, with the Bank of England’s Monetary Policy Committee (MPC) holding Bank Rate at 5.25% for the third month in a row. Inflation is also coming down, with prices rising by 4.2% in the year to November 2023 – compared with a peak of 11.1% in the year to October 2022.

This renewed positivity is reflected in residential property forecasts for 2024. This time last year, Savills was predicting five-year house price growth of just 6.2%, reflecting a lack of consumer confidence in the face of rising mortgage rates. Just a year later, it is predicting much healthier growth of 17.9% in the five years to 2028.

New Year, new mortgage market?

So, what is happening in the mortgage market as we head into 2024?

Swap Rates have eased, leading to a steady reduction in fixed rate mortgage deals in recent months, with some lenders once again offering sub-5% deals. The new year has seen the start of a mortgage price war with HSBC launching a 5 year fixed rate at sub 4% in the first week of January. Although this may seem high after the extremely low rates seen during the pandemic, they are historically quite low in comparison with those seen in recent decades. Some readers may remember when the Bank Rate soared to 17% back in 1979, dealing a huge blow to millions of homeowners.

Traditionally the property market is very quiet over the summer months, although the last few years have bucked this trend. In 2023 the summer lull returned, leading to speculation of falling house prices and perhaps a property crash. However, since October there has been a steady increase in activity which continued through to year end. It appears that many clients now believe rates have peaked, and they are accepting current rates as the ‘new normal’, and those who had perhaps deferred buying or moving have made up their minds to proceed.

This can be seen in the latest mortgage approval figures from the Bank of England, which show that 47,400 mortgages were approved for house purchases in October – over 4,000 more than in September.

Access for older borrowers widens

The market in mortgages aimed at older borrowers is also continuing to grow. Although historically there has been concern amongst lenders that this demographic may have the resources to repay their debt, more and more are now willing to lend past the traditional retirement age. According to data provider Moneyfacts, the average maximum age for mortgage lenders has risen from 67 to 78 in just three years.

Improved outlook for buy-to-let investors

2023 also proved challenging for buy-to-let investors, because the rates lenders use to calculate rental yields are still quite high, making it difficult to re-mortgage. According to the Society of Mortgage Professionals, however, things are looking up for this subsection of the market in 2024. Tenant demand is at a record high, 68% of landlords are reporting profits, and some lenders are even reducing stress testing in the face of a more positive outlook.

Overall, the picture for 2024’s mortgage market seems to be one of optimism, following a challenging year on all sides. With interest rates stable, inflation easing and mortgage rates becoming more competitive, we are looking out on a far more positive year than the one before.

Our expertise, at your service

Our mortgage experts have been following the market closely and are here to support you as we move into 2024 and beyond.

To discuss your mortgage requirements, please do get in touch with your usual adviser or call us on 020 7444 4030 or email at mortgages@partnerswealthmanagement.co.uk.

Rebecca Rider
Partner
rrider@partnerswealthmanagement.co.uk
020 7444 4042

The contents of the article have been prepared solely for information purposes. The article contains information on financial products and services and such information is designed for and addressed solely to individuals seeking generic industry information. Past performance is no guide to future returns. The above content does not represent a personal recommendation. Your home is at risk of repossession if you do not maintain mortgage payments.

Sources