First-time buyers and experienced investors alike struggled through an unprecedented mortgage crisis in 2023, the results of which we may still be feeling across the UK housing market. But, with a recent article from The Guardian reporting that UK homeowners could face £19 billion in mortgage costs this year thanks to an estimated 1.6 million cheap fixed-rate deals expiring, the question on every interest-conscious stakeholder’s mind is ‘What will my mortgage rates look like in 2024?’

Fortunately, the team at Concept Capital Group has taken some of the guesswork out of a downturned housing market with a mortgage forecast compiled to give investors like you a better idea of what experts across the board expect to see this year.

For everything from house prices to interest rates, this week’s mortgage-minded Concept Capital Group blog has you covered.

How Did Mortgage Rates Inflate This Much?

According to a Financial Stability Report released by the Bank of England in December last year, around 45% of fixed-rate mortgage deals agreed before the end of December 2021 have yet to renew. Since December 2021, the Bank Rate – which is the metric the Bank of England uses to determine the interest rate paid when borrowing money, accruing debt or earning interest on an account – has increased to its highest level in 15 years, rising 14 times in a row to reach 5.25% in August 2023.

Though the Bank of England’s Monetary Policy Committee (MPC) has since ended its streak of rate hikes, its goal of curbing the UK’s rising inflation has had lukewarm results. As the average UK citizen continues to deal with the stress of a cost of living crisis and the aftershocks of last year’s mortgage crisis, the economic future of the housing market may hinge on the Bank of England making mortgages more manageable in 2024.

Will Rates Improve in 2024?

Though the predicted outcome for the UK’s average mortgage rate by the end of 2024 is still largely speculative and likely to change, there is much to suggest that any change could be for the better. 

Around 55% of UK mortgages have been moved to a higher interest rate since rates started rising in December 2021, with 5 million more mortgages expected to be repriced by 2026. Despite some concern about whether this means mortgage rates will not return to lower levels, a poll of economists held by Reuters showed that a slight majority expect a rate cut from the Bank of England before mid-2024 ahead of the upcoming general election later this year.

Since being published in June last year, the Mortgage Charter laying out the standards lenders must adopt to support customers and borrowers has been signed by 90% of UK lenders. This coupled with anticipation of future policy by the Bank of England and Chancellor of the Exchequer Jeremy Hunt has led some mortgage lenders to cut their rates, driving a slight recovery from 2023’s mortgage crisis. This includes leading lenders like Nationwide introducing their lowest rate in eight months and HSBC announcing across-the-board interest rate cuts for their mortgage deals.

CBRE’s Real Estate Market Forecast

A real estate market forecast by commercial property firm CBRE has further suggested that, with UK interest rates staying at a steady 5.25% since the second half of 2023, 2024 could see the Bank of England cutting rates further to stimulate economic growth. Though borrowing costs are likely to stay high throughout the year, wage growth may also mingle with falling interest rates to make mortgages more affordable overall. Other mortgage-related insights from the forecast include:

  • A loosening of monetary policy in the second half of 2024 due to falling inflation
  • The base interest rate falling below 5% by the end of the year
  • Lower loan-to-value rates for those remortgaging this year
  • Higher loan-to-income ratios throughout the year

The real potential of this forecast is already visible in some areas, with the residential mortgage market showing its greatest number of available mortgage deals since March 2008 across a range of deal types. All in all, mortgage rates are currently in a position to make a real shift towards a market much more accommodating towards homeowners, property investors, landlords and even first-time buyers.

How Will Mortgage Changes Affect the Housing Market?

As seen last year, shifting mortgage and interest rates can have a knock-on effect on the economy.

According to predictions from Lloyds Banking Group and Halifax, those seeking entry into the housing market for homeownership, buy-to-let, or investment purposes might expect a fall in house prices ranging between -2% and -4%. With the average UK house price having increased by a dizzying 59% since 2013, the £105,114 rise in costs may be as intimidating as ever to some.  

Real estate firm Savills reported that demand in the housing market has risen due to falling mortgage rates, but that several months of low mortgage approvals in 2023 have caused completed transactions to dip to -21% below the 2017-19 average.  

UK Finance expects this fall in mortgage lending and approvals to continue throughout 2024, forecasting a decrease in gross lending of around £215 billion and an increase in mortgage arrears across the country. A house price report from Zoopla supports this analysis, speculating that the average owner-occupier could see an increase in monthly mortgage payments of 39%.

Although the market may appear to be healing this year, property investors and prospective homeowners may be better off waiting for a more stable climate.

Investing in Mortgage-Free Buy-to-Let Housing

At Concept Capital Group, we offer a mortgage-free alternative to traditional property investment that allows risk-averse clients to enjoy the benefits of investing in buy-to-let property without having to worry about market instability cutting into their monthly profits.

Our fixed-price modular homes are insured for rent recovery to protect investors against void periods and other obstacles to consistent rental payments. At the same time, our property and tenancy management services offer complete ease and peace of mind for those interested in a truly passive source of income.

For more on our mortgage-free property investment opportunity, book a call with our team today.

Concept Capital Group

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