What are the mortgage trends expected in 2024?

Experts discuss their expectations for the year ahead

What are the mortgage trends expected in 2024?

With 2023 drawing to a close, many are beginning to turn their attention to next year and what trends might fill the headlines and shape their businesses.

So, how is the mortgage market shaping up for 2024?

How is next year shaping up for mortgages?

Chris Barry (pictured left), director at Thomas Legal, said in Autumn 2022, the mini-Budget triggered pay rises exceeding inflation for millions, igniting a wage spiral. Despite escalating housing costs, Barry said the prospect of inflation diminishing in line with initial expectations seemed improbable.

“This expected sustained inflationary trend throughout 2024 is poised to keep the Bank of England base rate from decreasing, compelling borrowers to reassess their financial moves,” he said.

Barry said that most agents outside London are seeing high stock levels. The reason average house prices are not coming down, he added, is that lower-value mass-market properties are not shifting - whereas the higher-value, lower-volume, properties are selling.

“The higher end of the market typically consists of those with larger deposits, meaning they have access to the lowest rates, and the lower end of the market are typically first-time buyers or investors,” he said.

As such, Barry said first-time buyers are struggling to afford mortgages with 5% or 10% deposits, and investors are struggling to find residential property with a return greater than cash in the bank, which is something he expects to see continue into next year.

“As economic dynamics unfold, the intricate interplay of wage dynamics, housing market trends, and borrowing challenges sets the stage for a complex financial landscape in 2024, where different segments of the population face distinct hurdles in navigating the evolving terrain,” he said.

What trends will there be in 2024?

Clive Read (pictured right), owner at Goldmanread, envisions a property market poised for a revival in the coming year, fuelled by the acknowledgment of a ‘new normal’ marked by realistic mortgage rates.

“The abrupt shock of increased interest rates in 2023 left numerous potential homeowners hesitant, akin to rabbits caught in the headlights, clinging to the hope of returning to the historically low rates of the past decade,” he said.

Read added that it is evident a regression to mortgage rates of 2% to 3% is improbable, as emphatically emphasised by the governor of the Bank of England.

With mortgage rates now settling into a more stable pattern, he said there is a palpable expectation that confidence will gradually be restored among prospective homebuyers.

“A pivotal aspect of this resurgence lies in authorities sustaining this newfound stability while concurrently building and development initiatives to bolster the supply side of the housing market,” he said.

The key to resolving the ongoing housing crisis, Read said, hinges on a substantial uptick in the number of properties entering the market.

As we navigate this transitional phase, Read said achieving equilibrium between maintaining stable mortgage conditions and incentivising growth in property supply becomes paramount.

“Striking this delicate balance is essential for steering a sustainable course through the ever-evolving landscape of the real estate market,” he said.

The trajectory toward a revitalised property market, Read added, is intricately tied to this careful interplay of stability, confidence-building, and strategic initiatives to augment housing supply throughout next year.

What key trends and influences are you expecting to see in the housing market in 2024? Let us know in the comment section below.