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Posted on: December 5, 2023

What might happen to the mortgage market in 2024?

2023 has been a whirlwind ride of disappointment with bank base rate rising from 3.5% to 5.25%. This followed 2022 where rates rose from 0.1% to 3.5%*.

We have had rates softening in the early part of the year and the first signs that rates might have peaked or at least slowed down. The Bank of England base rate was 3.5% and whilst green shoots were not on the agenda, certainly seeds were being planted. But inflation remained stubbornly high and the worry that wage rises were catching up with inflation and rates have been increasing ever since. There has been some respite with rates being held in September and October. The latest inflation rate of 4.6% is encouraging.

2023 has seen a significant drop off in the number of people moving home. Retail rates have remained stubbornly high and have only just started softening in the last couple of months.

So, what might happen in 2024?

Rates need to drop further in order for the market to get back to some form of normality. And if inflation continue to fall towards the Bank of England’s 2% benchmark, then this could pave the way for interest rate cuts. The main obstacle to this is wage rises which currently sit at 7.8%**. If this continues then this might feed inflationary pressures. Couple this with the wars in the Middle East and Ukraine and we are by no means out of the woods.

Stimulus from Government with tax breaks such as Stamp Duty are unlikely due to the economic climate. So, this leaves us with the natural reduction in interest rates to stimulate buyers back to the market.

The recent hold in rates and positive inflation news shows is promising, but we will have to wait and see.

For more information you can contact us on 0118 9410026 or email info@villagefs.co.uk

Source

*Bank of England

**Statista.com

The information contained within was correct at the time of publication but is subject to change

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