The UK housing market has experienced a challenging year, with house prices cooling and mortgage approvals declining. A number of factors have contributed to this, including rising interest rates, economic uncertainty, and concerns over affordability. However, despite these challenges, 2023 ended on a more positive note, with increased confidence for the year ahead.
One of the main factors impacting the market has been changes to the Bank of England base rate. The bank rate has risen steadily throughout the year, but at a much slower pace compared to previous years. Average residential fixed rates reached a peak in July, but have since started to decline. Lenders have also begun to bring back lower fixed rates, indicating a more positive shift in the industry.
Inflation has also played a role in the housing market’s performance. Inflation reached a peak of 6.7% in September 2023, causing households to struggle with the cost of living. However, inflation has since fallen, which could lead to further decreases in the coming months. This is good news for homeowners, as it could result in lower mortgage rates and cheaper products.
Looking ahead to 2024, there are signs that the market will become more buoyant. Two-year fixed rates are now available at under 5%, which is some of the lowest rates seen in recent years. This, coupled with the improved pay rates, could encourage homebuyers to enter the market. However, it is important for brokers to adopt a proactive mindset and take advantage of every opportunity that the next year brings.
In conclusion, the UK housing market has faced challenges in 2023, but there are signs of improvement and increased confidence for 2024. Factors such as changes to the Bank of England base rate and declining inflation could contribute to a more positive market outlook.
