Will Mortgage Rates Go Down in 2024? What to Expect and How to Navigate the Market

As we move through 2024, one of the biggest questions on the minds of both buyers and investors is: Will mortgage rates go down?

Here's what you can expect for the remainder of the year.

 Key Takeaways

- Mortgage rates are likely to remain in the 4-4.5% range throughout 2024.

- House prices are expected to stay relatively flat, but rising wages could improve affordability.

- There are currently more homes for sale than at any point in the last six years, increasing buyer options.

- The Bank of England's Base Rate is anticipated to fall to 3.5% by the end of 2025.

 A Look at Mortgage Rates

Despite some recent fluctuations, mortgage rates are expected to hover around 4-4.5% for the rest of 2024. While this might be disappointing for those hoping for a significant drop, it's essential to understand the broader context.

In June 2023, the average five-year fixed-rate loan for a 75% loan-to-value (LTV) mortgage peaked at 5.8%. Since then, it has decreased to around 4.4%, making a substantial difference in monthly repayments for many homeowners.

However, the likelihood of rates dropping below 4% this year is slim. Even if the Bank of England's Base Rate decreases, mortgage rates are not expected to follow suit significantly.

The good news is that these expectations are already factored into current mortgage offers, giving you a clearer picture of what to expect.

What’s Driving These Trends? 

The primary factor influencing mortgage rates has been inflation. Over the last 30 months, the Bank of England has increased the Base Rate to curb rising inflation, which had a direct impact on mortgage rates. While inflation has cooled, global economic uncertainties, such as geopolitical events and supply chain disruptions, continue to keep rates elevated.

 How Affordability Could Improve

While mortgage rates might not decline significantly, buyer affordability could still improve in 2024. This is primarily due to rising wages, which are expected to increase household disposable income by 3.5% this year. When combined with stable house prices, this trend could enhance affordability for many buyers.

In fact, the housing market is already showing signs of recovery, with a 9% increase in the number of sales agreed year-on-year. This uptick is encouraging more sellers to list their properties, offering buyers more choices and potentially more negotiating power.

 A Market with More Options

One of the most notable trends in 2024 is the increase in the number of homes for sale. Currently, there are more properties on the market than at any point in the last six years. This surge in supply is good news for buyers, as it provides more options and opportunities for negotiation.

However, it's worth noting that while it remains a buyer's market, the discounts sellers are willing to offer are narrowing. In June 2024, UK buyers were paying an average of 96.8% of the asking price, compared to 95.6% in October 2023.

Regional Trends and Opportunities 

Affordable areas continue to be popular among buyers, with regions like Yorkshire and the Humber and the North West seeing the strongest growth in sales. Meanwhile, the South West and North East are experiencing a surge in new listings.

In London, the supply of homes for sale has increased by just 8%, leading to faster house price rebounds as more buyers compete for limited properties.

 What This Means for You

At Fabrik Property Group , we believe that understanding these market dynamics is crucial for making informed investment decisions. While mortgage rates may not drop significantly in 2024, the combination of stable house prices, rising wages, and increased property options can still create favorable conditions for buyers and investors.

Whether you're looking to purchase your first home, invest in property, or expand your portfolio, our team is here to guide you every step of the way. We remain committed to helping you navigate the complexities of the real estate market with confidence and clarity.

For more insights and personalized advice, don't hesitate to reach out to our expert team.

Kind regards,

Dale Anderson

UK Tel: 020 8175 9899

UK Mobile: 079 1024 4259

SA Tel: +27(65) 630 9368

Email: dale@fabrikpropertygroup.com