Good news for homeowners and prospective buyers as mortgage rates continue to drop

Earlier this month, Halifax announced a drop in mortgage rates by nearly one percentage point with HSBC swiftly following suit. The UK's largest lender, Halifax, cut the price of its two-year fixed rate remortgage from 5.64% to 4.81%. Taking up that new rate on the average ￡200,000 UK home with a 25-year mortgage would cut monthly repayments by roughly ￡98 a month, from ￡1,245 to ￡1,147. HSBC's two-year fixed rate for remortgages have dipped below 4.50% for the first time since July 2023.

Now more major lenders including Barclays and Santander, have unveiled mortgage rate cuts, in a sign of what some experts are dubbing a "turning point" for households who have faced years of soaring bills. While HSBC’s cuts were notable for bringing rates down below 4 per cent, Barclays says the two-year fixed rate mortgage will apply to anyone buying a new home and not remortgaging for an existing one. The Bank of England reported that interest rates on mortgages, loans and savings had been at their highest level for many years, with the UK’s base interest rate being increased 14 times over the past two years.

ContactBuilder account manager, Julianne Bailey , said "Seeing this shift in the housing market is promising for those looking to purchase their first or next new home. We've been here to support our clients throughout the tougher conditions we've seen this past year, implementing new reporting tools to our system to ensure optimal marketing efforts."

A look at the housing market

Each month, we take a look at the trends of the UK housing market. This month, all but one of our sources are indicating month-on-month house price decreases, in the range of -0.7% to -1.9%. While Nationwide hasn't reported any change from the previous month. The majority of our sources continue to record annual house price decreases ranging from -1.1% to -4.6%. home.co.uk & Halifax are the only sources to record an annual increase of 0.1% to 1.7% respectively.

Hometrack reports first-time buyers are the largest group of would-be movers in the next two years, followed by upsizers. Rightmove comments average mortgage rates have now fallen for 19 consecutive weeks, with the average 5-year fixed mortgage rate now 5.11% compared to 6.11% in July. They also predict that new seller asking prices will drop nationally by an average of 1% in 2024, with motivated sellers still needing to price below their local competition to secure a sale, as buyer affordability remains stretched.

House prices to increase, according to Knight Frank

The UK's leading independent real estate agency, Knight Frank, has predicted that property prices will rise by 3% in 2024, with a cumulative growth of 20.5% by 2028.

They attribute this positive change to a faster-than-expected drop in inflation, resulting in mortgage lenders significantly lowering their rates to attract business in a market of reduced volume, with the most competitive 5-year fixed-rate mortgages now below 4%.

Data from Halifax and Nationwide indicate a turnaround, with reported increases and decreases in house prices showing a recovery from the 5% drop noted in August.

The timing of the general election poses uncertainty, with potential internal conflicts within the Conservative Party and international tensions impacting UK inflation. However, the market could see a boost from pre-election incentives, such as tax cuts and support measures for first-time buyers, which may include longer-term fixed mortgages, reduced deposit requirements, and a revival of the help-to-buy scheme

Enjoyed our first Beyond the Bricks article? Subscribe so you don't miss our next release!

?