Mortgage rates fall and buyer confidence rises

The UK housing market is showing signs of recovery in 2024, as mortgage rates fall, buyer confidence rises, and sales activity increases, according to a leading estate agent.

Nicky Stevenson, the managing director of Fine & Country, says that the Bank of England’s decision to keep the interest rate at 5.25% for the fourth month in a row reflects its desire to preserve the current stability.

She says: “The interest rate has reached its peak, and we expect it to go down in the coming months.

“Leading forecasters predict that the inflation rate will drop to 2% by April.”

She adds: “These factors have boosted the confidence of buyers and sellers in the housing market, which is at its highest level since January 2022, according to the GfK Consumer Confidence Tracker.”

Market activity has picked up

Ms Stevenson points out that market activity has picked up, with 13% more sales agreed in the first three weeks of January than in the same period last year, showing the optimism of sellers for the year ahead.

She says: “This increase in sales activity has been seen across all regions and countries, with Yorkshire and the Humber and the West Midlands leading the way, with 19% and 17% growth respectively.

“This shows that buyers and sellers are finding a common ground on pricing.

“However, sellers still need to price their properties realistically, as Zoopla reports that one in five sellers have accepted more than 10% below the asking price to secure a sale.”

Property prices have improved in January

Ms Stevenson also notes that the property prices have improved in January, with a 0.7% monthly rise and a 0.2% yearly decline, compared to a 1.8% yearly decline in December, as reported by Nationwide.

The average asking price of new sellers has also gone up by 1.3% in January, more than double the 10-year January average of 0.6%.

She says: “The latest data from the Bank of England shows that mortgage approvals have hit a six-month high, reaching 50,500 in December.

“This is the third month in a row that mortgage approvals have increased, indicating that the market is gaining momentum and that buyers are returning to the market with caution.

“The effective interest rate, or the actual interest paid on new mortgages, has also fallen by six basis points to 5.28% in December, the first decline in over two years.”

More competitive deals and choices for borrowers

She says that lenders are offering more competitive deals and choices for borrowers, with the best fixed-rate mortgages now below 4%.

Ms Stevenson said: “Moneyfacts reports that the number of mortgage products available has risen for the sixth month in a row, reaching 5,899 options in January, the highest level in 15 years.

“As the market stabilises, the average shelf life of mortgage products has increased to 21 days, the longest since June.”

She concludes by saying that the number of buyers contacting agents about properties for sale is 8% higher than last year and the number of new properties listed by sellers is 11% higher.

Ms Stevenson said: “We expect the interest to continue into February, which along with April, is the month when properties listed are most likely to find a buyer.”

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