How Mortgage Price Wars Affect the Housing Market 2024?

How Mortgage Price Wars Affect the Housing Market 2024?
Updated: In: Conveyancing

Mortgage Lenders to Reduce Home-Loan Rates

Boxing day 2023 saw record numbers of homes entering the market. As a result, mortgage lenders are predicted to undercut one another, with mortgage experts predicting a mortgage price war, benefitting homebuyers as lenders compete for business.

Home buyers are encouraged to grab good deals while they can as financial experts predict that many lenders will reduce their home-loan rates over the upcoming months.

Mortgage Price War Heating Up Property Market

Data from Rightmove evidences the property market heating up in 2024 with more than 100,000 properties going up for sale on Boxing Day. This figure is the highest number of new sellers in any single day of the year dating back to 2011.

Furthermore, the volume of buyers contacting estate agents about properties for sale was 17 per cent higher than on Boxing Day in 2022.

Predicted Mortgage Rate 2024

Mortgage brokers are expressing “cautious optimism” about the property market as we enter 2024 as Halifax and HSBC announce rate cuts on their mortgage deals. Specifically, new two-year, five-year, and 10-year fixed deals at Halifax are being reduced up to 0.83 percentage points.

Furthermore, financial markets expect the central bank to begin cutting borrowing costs from the current rate of 5.25% to below 4% by the end of 2024, sharply reducing the cost of taking out a home loan.

This development is likely to be beneficial for individuals looking to enter the property market.

How Will the Mortgage Price Wars Benefit Buyers

As mortgage lenders undercut each other to compete with the influx of people entering the housing market, buyers can benefit from the following:

Lower Interest Rates: The rate cuts on mortgage deals will allow borrowers to secure mortgage loans at a lower interest rate. This can result in reduced monthly mortgage payments and overall lower borrowing costs.

Increased Affordability: Lower interest rates can make homeownership more affordable for buyers entering the market. With reduced mortgage rates, individuals may find it easier to qualify for loans and therefore afford higher-priced properties.

Fixed-Term Deals: The mention of two-year, five-year, and 10-year fixed deals at Halifax suggests that borrowers will be able to lock in these lower rates for an extended period. Fixed-term deals can provide stability and predictability in mortgage payments. As a result, borrowers are protected from potential interest rate increases during the period of their term.

Increasing Housing Market Activity: Lower mortgage rates can increase activity in the housing market. Potential buyers may be more motivated to enter the market, leading to increased buying and selling of properties.

It’s important to note that while lower interest rates can be beneficial for buyers, the overall health of the property market depends on many various factors. Buyers should remain informed about market trends and consider their own financial situation before making significant decisions.

Why is There a Mortgage Price War?

Due to most mortgage lenders missing their lending targets in 2023, experts are predicting the lenders will reduce their rates to attract new borrowers.

2023 witnessed a surge in product transfers, due to market uncertainty. Therefore, many individuals chose to stick with their existing lenders and renegotiate new deals. Therefore, mortgage experts predict price wars as 1.6 million mortgages are due for renewal in the upcoming year. This figure represents a large amount of the market, so it’s vital to lenders to secure these new deals.

Lenders will either become very competitive on their internal rates for existing customers to keep them on. Alternatively, lenders are likely to offer lower rates to tempt mortgage holders away from other lenders. Either way the impact on mortgage holders is a positive one.

Buyers Encouraged to Act Fast

Riz Malik, of Essex-based R3 Mortgages warns that economic shocks could quickly make deals “a moveable feast”.

“If a lender does come out with something, it might be time to grab it and then if things do improve later on, then obviously reassess your situation closer to the time.”

He adds that “First-time buyers in particular should be alert to deals emerging now, as the property market may heat up later in the year.”

Several housing market forecasts have indicated that house prices are generally edging down this year, potentially providing opportunities for buyers.

Furthermore, Halifax expects house prices to fall by between 2 per cent and 4 per cent, while Nationwide Building Society expects prices to drop by a low single-digit figure or remain broadly flat this year.

Emerging Trends and Future Outlook

In conclusion, the mortgage price wars of 2024 offer a unique window of opportunity for buyers. However, the evolving market dynamics suggest a need for proactive and flexible approaches. Stay updated as the housing market continues change throughout 2024.

Potential Shifts in House Prices

While the current landscape of the housing market is marked by mortgage price wars and favourable conditions for homebuyers, it’s essential to acknowledge the potential changes on the horizon. Although initial expectations predicted a continued decline in house prices throughout the year, there is now a subtle shift in industry attitudes.

Industry insiders are starting to entertain the idea that house prices might see an increase of 2-3% by the end of 2024 as the market continues it’s ongoing recovery from the housing crisis as well as the upcoming stamp duty deadline in 2025.

Whether the market leans towards a continued decline or experiences an unexpected upswing, it’s crucial for buyers to stay informed. Economic uncertainties and market fluctuations could quickly alter the current opportunistic conditions.

The Role of Conveyancing in Navigating Mortgage Price Wars

Conveyancing plays a pivotal role in ensuring a smooth and secure transaction. In times of market change, having a dedicated conveyancing department and experienced solicitor is invaluable. Their expertise is crucial in navigating the intricacies of property transactions, safeguarding the interests of buyers, and ensuring a seamless transfer of property ownership.

For those considering entering the property market this year, securing the best mortgage deal is just one part of the equation. Partnering with our expert conveyancing department means having dedicated professionals by your side, who can assist you in every step.

Legal Disclaimer.

All advice is correct at time of publication.