Happy New Year to you and welcome to 2024! We hope you enjoyed the festivities with your families and friends.
“Approach the New Year with resolve to find opportunities hidden in each day” Michael Josephson
At the start of each year, we like to look back and reflect on what has happened over the past year. Then, we will look forward in to 2024 and give predictions on property prices and interest rates.
Firstly, let’s look at what happened in 2023.
Inflation:
- The Consumer Price Index was down to 3.9% from 10.1% in January 2023.
- The drop to 3.9% was lower than expected and was good news for interest rates. The Bank of England’s target inflation rate is 2%.
Interest Rates:
- The Bank of England base rate rose from 3.50% to 5.25% (an increase of 1.75%). After 14 consecutive rises, the base rate has remained stable at 5.25% since August 2023.
- Fixed rate mortgages however are very similarly priced to what they were at the start of 2023 with rates starting as low as 3.86% (at 05/01/24).
Property Prices:
- It was widely predicted that property prices would drop by 5-10% in 2023. This is what actually happened…
- Nationwide’s House Price Index showed a 1.8% decrease in prices in 2023.
- Halifax’s House Price Index to November 2023 showed prices had dropped by 1% over the year.
- The Office of National Statistics (ONS) reported house prices had decreased by 1.2% in the 12 months to October 2023
- Rightmove reported that prices were 1.1% lower year on year in December 2023.
Number One Mortgages:
In 2023 we worked harder than we have ever before to deliver a great service to you. We have been securing rates early for many of you in order to protect you against any potential rate rises, whilst actively keeping an eye out for rate reductions. With fixed rates having dropped during the latter part of the year, we took the time and made the effort to secure the improved rate for you before your current product ends. Why? Because we care for you and want to do the very best we can for you.
We remain the highest-rated Independent Mortgage Adviser firm in Sussex on Google which we are extremely proud of, and are dedicated to maintaining this status in the years to come.
As always, your continued support with recommending us to your friends and family means the world to us. We are very grateful – thank you! Please keep them coming…
So, what about 2024?
Interest Rate Predictions for 2024:
- Lloyds Banking Group predicts the Bank of England base rate will remain at 5.25% during most of 2024 and will drop modestly to 5% by the fourth quarter of the year.
- The money markets are currently indicating that UK interest rates will have fallen to around 4.25% by December 2024 with the first cut being as early as May.
- Unbiased has said that as inflation has declined faster than expected in 2023, the Bank of England could start cutting the base rate in 2024 and possibly fall to 4% by the end of the year.
- Capital Economics believes the Bank of England won’t cut rates until late in 2024 but forecasts rates will be cut to 3% in 2025.
Property Prices forecasts (UK) for 2024:
- Rightmove predicts a modest average 1% fall in new seller asking prices and more choice for buyers in 2024.
- Zoopla expects house prices to fall 2% over 2024 and for mortgage affordability to improve steadily with rising incomes and rate decreases.
- Nationwide expect prices to remain flat or decline by up to 2% in 2024.
- Rival lender, Halifax, has forecast a steeper decline in house prices of some 2 to 4% in 2024.
- Savills estimates that the market will bottom out around the middle of 2024 before seeing house price increases return.
What do I forecast will happen to property prices and interest rates in 2024…?
I believe that shorter-term fixed rates will continue to improve throughout most of 2024 which will in turn improve mortgage affordability. Rents are forecast by most to increase in 2024, therefore I predict that first-time buyers getting onto the property ladder will increase in numbers throughout the year to take advantage of more choice and property prices bottoming out during the year. It is the first-time buyers that typically drive the market for home movers to move up the ladder.
I am frequently asked; “when is the best time to buy?”. The answer can be different depending on personal circumstances. However, my answer is commonly; “when you see the right property for you and your family in combination with being able to proceed with affordable monthly mortgage payments, then this is the right time for you.”
To summarise, it feels like this year will be calm with a whiff of positivity around. If you are wanting to move home, I feel there is no harm in exploring your options, affordability and chatting over your objectives with our expert advisers.
What are Number One Mortgages plans this year…?
We’ve completed our business plans and expect the mortgage market to be busier this year and will grow the advice team to support you throughout 2024 and beyond.
Our focus remains to provide positive outcomes for you by offering an excellent service to keep you guys recommending us. ????
We are here for you whether you are looking to move, improve or secure the best rate when your current product expires.
Here to help – have a great 2024 ! ????
All the best,
Kevin Dunks