What’s going to happen in the mortgage market in 2024?
David Lauder, Independent Mortgage Adviser with ESPC Mortgages, makes some predictions for the 2024 mortgage and property market.
In the current climate, making predictions is a difficult task. However, here is some of what I expect to see in the mortgage and property market in 2024.
Will 2024 be a sellers’ or a buyers’ market in Edinburgh and the surrounding areas?
As 2023 drew to a close, we saw the market slowly cooling down and less activity, which is expected for the time of year. However, on average, properties still achieved around 103% of Home Report valuation, although this is a reduction on the 2022 average, which was closer to 107%.
As 2024 progresses, the hope is that buyers’ and sellers’ confidence will return but it certainly seems that there’s a bigger window of opportunity for buyers, particularly first-time buyers who have a better opportunity of getting a property much closer to valuation. This will allow most of their hard-earned deposit to be used for the mortgage, as opposed to the offers over valuation, which has been a regular feature in previous years. This should, in principle, mean the buyer gets more house for their money, which can offset any potential increase in monthly repayments with the rate increases we saw last year.
Interest rate changes in 2023 & predictions for 2024
We saw regular Bank of England rate rises during 2023 up to the present rate of 5.25%, however there have been no increases since September. Much will depend on inflation and all its variables; however, the Bank of England expects the base rate to remain consistent until springtime, with the hope of a gradual decline after this, to reach closer to 4.25% by 2024’s end.
The good news is that we’ve seen some stability in mortgage interest rates recently and are now regularly receiving fixed-rate reductions on new products. However, interest rates are unlikely to return to the record low levels seen during the 2010s, and more likely settle at a level below the current, but higher than we saw post-Covid.
The lenders typically price rates of SWAP rates which are not always a direct correlation with the Bank of England base rate.
Increase in the number of 5-10% deposit mortgages available
Mortgage lenders are still showing a greater amount of confidence with a wider range of lenders willing to consider a 5% deposit. This should help first-time buyers, who are perhaps renting at present and in essence paying someone else’s mortgage. The challenge for many clients with smaller deposits has been the common theme of properties selling well over the valuation; mortgage lending is based on the lower of purchase price or valuation, which means any price paid over the value cannot be used as part of the deposit for mortgage purposes. It’s for this reason that deposits often need to be higher than 5%. We expect these clients will have a better chance in 2024 of getting properties closer to Home Report value and therefore finding is easier to fund the mortgage deposit.
Hopefully, help may become available from Government initiative schemes, which can provide options, although no firm details of any new initiatives are currently available.
What impact will recent events have on the Edinburgh property market?
The Edinburgh market is certainly better placed and more robust than almost all the rest of the UK and should still remain strong.
ESPC Mortgages
To summarise, we at ESPC Mortgages remain optimistic for 2024. The mortgage market is still competitive and there are good solutions to be found, tailored to the client’s needs. The team look forward to this continuing throughout 2024 and to another successful year of mortgage approvals.
We will work to help more and more people get their dream property and are available to help existing and new clients review their existing mortgage arrangements to ensure they have the most suitable solutions during their mortgage journey.
ESPC mortgages offer expert independent mortgage advice in Edinburgh. Whether you are looking for first time buyer mortgage advice, are interested in finding out more about buy-to-let mortgages or would like to re-mortgage, get in touch with the team on 0131 253 2920 or fsenquiries@espc.com
The information contained in this article is provided in good faith. Whilst every care has been taken in the preparation of the information, no responsibility is accepted for any errors which, despite our precautions, it may contain.
The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.