From fluctuations in mortgage rates to changing dynamics in housing supply and demand, March 2024 witnessed activity and shifts within the UK property market.
Major lenders, including Barclays, HSBC, NatWest, and Leeds Building Society, initiated increases in mortgage rates, marking a potential shift in borrowing costs. While these adjustments are expected to be moderate for the time being, they signal a period of stability until potential cuts to the base rate come into view. According to Simon Gammon of Knight Frank Finance, such changes are likely to influence buyer behaviour and affordability in the market.
The latest data from Rightmove reveals notable increases in average mortgage rates compared to a year ago. For instance, the average 5-year fixed mortgage rate rose to 4.89%, up from 4.45% a year ago. Similarly, the average monthly mortgage payment for a typical first-time buyer increased to £1,108 per month, emphasizing the growing financial strain on homebuyers amidst rising borrowing costs.
What’s more, research by eXp UK indicates a 9.2% increase in for-sale stock levels across the English property market during the first quarter of 2024. This surge, accompanied by a 15.6% rise in available stock compared to the previous year, suggests a renewed confidence among sellers eager to capitalise on improving market conditions. Every county experienced an uptick in for-sale listings, signalling optimism regarding the market’s health and resilience.
Zoopla’s House Price Index highlights a balanced market environment, with UK house prices remaining broadly static (-0.2%) while sales volumes surge by 12% year on year. The market is on track for 1.1 million sales in 2024, representing a 10% increase from the previous year and indicating sustained momentum in property transactions. Commenting on the latest report, Richard Donnell, Executive Director at Zoopla said:
“The rebound in sales being agreed continues for a fourth month as mortgage rates have fallen, consumer confidence improves and home buyers have much greater choice of homes for sale. The pipeline of sales is growing and we expect 100,000 more people to move home in 2024 than last year.
There is clear evidence that house prices are firming and the pace of price falls is slowing. We don’t believe that prices will start to rise as buyers face much higher mortgage repayments than in the recent past. The market is adjusting to higher borrowing costs and what we need is continued price stability which will create the environment for continued growth in sales and home moves. It’s important sellers remain realistic on what they can achieve for their home.”
Also, higher mortgage rates continue to impact buying power, particularly in southern England, where annual mortgage repayments for an average-priced home have increased significantly. The South West, South East, and East of England have experienced annual mortgage repayment hikes exceeding £5,000, with London seeing the highest rise of over £7,500.