The property market experienced challenges in 2023, which may have affected your outgoings. But what could affect house prices and mortgages in 2024?

Last year, rising interest rates as the Bank of England (BoE) sought to tackle high inflation led to millions of homeowners facing soaring mortgage costs. This had a knock-on effect, with some people struggling to secure a mortgage due to affordability tests and property sales falling in some areas as a result. 

Some of the key trends in 2023 are set to continue into the new year. Here are four property market predictions for the 12 months ahead. 

1. The Bank of England expects to lower its base interest rate towards the end of 2024

In November 2021, the BoE’s base rate was at a historic low of 0.1%. With several factors, including the war in Ukraine and the after-effects of the Covid-19 pandemic, leading to soaring inflation, the base rate was increased throughout 2022 and 2023. As of December 2023, the BoE’s base rate is 5.25%.

The rising base rate has a direct effect on the outgoings of many mortgage holders. Even a seemingly small difference in the interest rate you pay can add up.

If you have a £200,000 repayment mortgage with a 25-year term, assuming the interest rate remained the same, you’d pay:

• £1,002 a month and around £100,477 in interest over the full term if the rate was 3.5%
• £1,228 a month and around £168,424 in interest over the full term if the rate increased to 5.5%.

The good news is that inflation is starting to fall. Data from the Office for National Statistics show inflation was 3.9% in the 12 months to November 2023. 

In a report, the BoE’s Monetary Policy Committee said it expects the base rate to remain at 5.25% until the third quarter of 2024. It then anticipates that it will gradually fall to 4.25% by the end of 2026. 

2. Halifax predicts house prices will fall by up to 4% in 2024

According to data from Halifax, house prices “held up better than expected” in 2023. Property prices fell by just 1% last year and the average home was valued at more than £280,000.

The lender noted this resilience was linked to a shortage of available properties, rather than strong demand from buyers.

Halifax expects house prices to fall by between 2% and 4% over the next 12 months due to “economic challenges”. However, it notes that as interest rates ease and affordability improves, the market could partially recover. 

3. Short shelf-life of mortgages could continue to affect borrowers

Changes to interest rates and competition meant that lenders vigorously reviewed their deals in 2023. In fact, in December, the average mortgage deal had a shelf-life of just 17 days, according to Moneyfacts. 

With interest rates expected to start falling, it’s a trend that could continue into 2024. 

While new mortgages on the market could provide you with more choices, it can be difficult to navigate. There’s also the risk that a deal you were interested in is pulled from the market before you have a chance to apply.

Working with a mortgage broker could help you find deals that are right for you, even if they’re changing quickly. 

4. A survey suggests a significant proportion of landlords plan to reduce their portfolio

Soaring interest rates over the last two years have affected buy-to-let mortgage holders.

In addition, the Renters Reform Bill is expected to progress in parliament in the coming months. The bill represents a significant piece of legislation that proposes to abolish section 21, also known as “no-fault evictions”.  Other proposals in the bill include doubling the notice period for rent increases to two months, giving tenants more rights to keep pets in properties, and a requirement for private landlords to join a government-approved ombudsman. 

As a result, some landlords are reassessing if the property market is right for them. 

According to a report in IFA Magazine, 1 in 4 landlords plan to reduce their portfolio in 2024. The survey also highlighted other struggles that may lead to landlords selling their properties, including maintenance requests (28%), tenant conflicts (20%) and finding suitable tenants (17%).

Get in touch if you’ll be searching for a mortgage in 2024

If you’ll be taking out a new mortgage this year, whether you’re moving into a new property or could benefit from remortgaging, please contact us. We’ll help you search the mortgage market to find a deal that suits your needs. 

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Some buy-to-lets are not regulated by the Financial Conduct Authority.

Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 17/01/2024