Navigating Regional Trends and Brokerage Guidance

Halifax's recent House Price Index has certainly received a lot of attention as it's counter to what was expected a few months ago. It reports a steady uptick in UK house prices, marking the fourth consecutive monthly rise. The average house price has risen by 1.3% from December 2023, now standing at £291,029—a cash increase of £3,924. Twelve-month figures show a robust 2.5% growth, the highest since January 2023. 

Estate agents attribute an uptick in buyer confidence to a combination of this data and recent reductions in mortgage interest rates, resulting in increased property valuations, listings, and viewings. However, lingering concerns about the cost of living make the market price-sensitive, cautioning against over-optimism.

People have been pouring over this data to understand what it might mean for the year ahead. Marc von Grundherr, director at London estate agents Benham and Reeves, has anticipated a fruitful year for the property market, citing a surge in house prices, new listings, and buyer offers. 

Despite heightened housing activity, Kim Kinnaird, director at Halifax Mortgages, notes that interest rates remain relatively high compared to recent lows, with demand continuing to outstrip supply. Affordability remains a challenge, with the average deposit now reaching £53,414, prompting many new buyers to purchase jointly. Looking ahead, Kinnaird warns of possible modest price declines amidst ongoing economic uncertainty.

Insights from Estate Agents: Positive Outlook for the Housing Market

Other estate agents echo Halifax's findings, confirming an upward trend in the housing market. Some anticipate sharp price increases in certain areas.

Simon Gerrard, MD of Martyn Gerrard Estate Agents, noted a pause in property searches in 2023 due to economic uncertainty. With the economy stabilising and lenders responding to controlled inflation with lower interest rates, Gerrard predicts a surge in prices, particularly in London.

Jeremy Leaf, a North London estate agent, observed increased activity in valuations, listings, and viewings.

Regional House Price Trends: Northern Ireland Leads Growth, South East Sees Decline

According to the recent Halifax House Price Index, Northern Ireland emerged as the frontrunner in annual house price growth across the UK, surging by 5.3% to an average of £195,760. Scotland and Wales also witnessed positive growth, with house prices climbing by 4% annually to £206,087 and £219,609, respectively.

Additionally, regions like the North West (+3.2%), Yorkshire and Humber (+2.8%), North East (+2.0%), and East Midlands (+0.5%) saw upticks in house prices over the past year.

More locally, things are a little different. Last month, the South East experienced the sharpest decrease in house prices, with properties fetching an average of £379,220, marking a 2.3% decline from the previous month. Meanwhile, London maintained its top spot with the highest average house price nationwide, reaching £529,528. However, prices in the capital have seen a slight annual decrease of 0.4%.

Adapting to Regional Realities: Navigating Mortgage Trends in a Dynamic Market

Looking ahead in the mortgage industry, these shifts in house prices carry significant implications. The South East's recent decline is obviously good news for buyers as it makes properties more affordable. However, it could mean higher loan-to-values for those wanting to remortgage, and those wanting to move may see the current home reduced by more than the new property. Conversely, London's continued position as the priciest market, despite a slight annual decrease, underscores its resilience amidst market fluctuations. This could indicate enduring demand but also highlights the importance of navigating affordability concerns in the capital.

As a mortgage broker, my job is to understand your needs and circumstances, explore options and demystify terms so that you can make informed decisions. My aim is to streamline the mortgage process for clients, offering clarity and peace of mind in what could otherwise be a bewildering journey. With over 20 years of experience, I'm used to helping clients navigate fluctuating market conditions to find a solution that's best for them.

Mortgage Interest Rate War 2024!

These are the headlines I’ve seen today and although they are clearly designed to grab your attention they are pretty much right in that it is widely expected that interest rates on offer to mortgage borrowers are going to decrease this year.

Unless you have been living in a cave for the last couple of years you will be aware that the UK has experienced a significant shift upwards in the Bank Of England base rate and this led to mortgage lenders increasing the rates at which they will lend to the likes of you and me. 

What happened over the last couple of years, starting with the lockdown in 2020 was that there was a great amount of inflationary pressure being put on the UK economy. The supply of money increased significantly over the “covid” period (so-called quantitative easing) and the Bank of England did not really prepare themselves for the inevitable inflation that they perhaps should have predicted. Consistently saying that the inflation was transitory throughout 2021 they did not look to use the tools at their disposal (Base Rate Increases) until 2022, at this point inflation was over 10%, their target being 2%.

Starting in December 2021 came many consecutive interest rate rises, leading to mortgage rates increasing along with those. As of the close of 2023, the Bank of England sat at 5.25% and just about two years earlier it was at the historic low of 0.1%.

So why are the headlines now saying rates are likely to decrease? The reason is mainly down to inflation. Finally, after a couple of years of the cost of living crisis, we are beginning to see inflation returning to more manageable levels. That doesn’t mean the cost of living crisis is over as prices are much higher now than they were two or three years ago. However, the rate of increase is definitely slowing. I certainly have noticed the price of fuel has come down quite a bit over recent months and that is certainly going to help on the inflation front. 

So if inflation returns to more manageable levels then the Bank of England will then turn to the economy to see what is going on there. Right now we are experiencing zero and possibly negative growth. Therefore we are on the brink of recession. I think this coupled with the reducing inflation will give the Bank of England the necessary reasons to reduce the Bank Base Rate. When this happens is difficult to predict, the Monetary Policy Committee meet later in January and it is expected they will hold rates, the decrease is likely to come later in the year.

The good news for borrowers is that “swap rates” are coming down in anticipation of the Bank of England Base Rate decreasing later this year. Swap rates are a good indication of what the lenders are likely to do as they are the rates at which lenders lend money to each other. At the time of writing we are seeing some high street lenders offering sub 4% fixed rates for five years, also the two-year deals are coming down a little. The best offerings are for those with higher deposits or higher equity of 40% or more. This has always been the case however rates are coming down for the customers with lower equity or deposit too.

My predictions are that over the course of 2024, we will see further interest rate decreases on offer from lenders and by the end of the year I predict the Bank of England Base Rate will be 4.5%. Keep an eye on a couple of other factors though. Wage increases do fuel inflation so if wages outstrip inflation (which they are not doing right now) then expect a rate rise. Another factor is the growth, or lack of, of the economy. Falling growth equals recession, this impacts lots of areas but my area of interest being house prices. If the housing market suffers that is a really big indicator of the UK recession. I would wager the Bank of England would then look to lower the Base Rate further should a recession hit. 

If you are looking to buy, move or remortgage then discuss with a broker your circumstances so that you can make an informed decision. Happy New Year everyone!