Has this year’s volatile property market left you with more questions than answers about when to buy? After bearing witness to mortgage rates spiraling up then trickling down again, making big financial decisions feels harder than ever. But hold out hope for 2024’s housing outlook. Early data suggests declining rates could offer homebuyers major savings in the year ahead.
Keep reading to find out how cooling inflation could help you cash in on better mortgage deals than expected. This article will explain the top factors that could see rates dip under 5% again soon. It will also share tips for securing rock-bottom interest when the time comes. By the end, you’ll feel renewed optimism about achieving your real estate dreams in 2024, no matter how rocky it’s been to reach this point.
Why There’s Hope for Homebuyers in 2024 for Mortgage Rates
Mortgage rates have had homeowners in a tizzy this past year. But if you’ve been waiting anxiously on the sidelines to buy a home, there’s good reason to get your hopes up for 2024. Rates may finally be calming from their wild ride. Let’s take a look at what’s happening and why the property market could turn a corner.
What on Earth Happened to Rates This Year?
I’ll say it plainly – mortgage rates went absolutely bonkers. In 2021/2022, average 2-year fixed mortgage rates hovered around 2.5%. Yes, you read that right – two point five percent. That allowed buyers to access incredibly cheap financing. Cue the 2023 inflation party. As the cost of everything from bread to gas shot upwards, the Bank of England felt forced to battle crazy rising prices. Their weapon of choice? Jacking up key interest rates that influence mortgages.
Long story short – mortgage rates followed suit big time. We saw average 2-year fixed rates crest over 6% by mid-2023. Yowza! That’s over triple what they were less than 2 years prior. Understandably, such huge rate hikes priced many prospective buyers out of the market quick fast. Affordability took a massive hit in a short period. But here’s the good news…
Why There’s Light at the End of the Tunnel
Recently we’ve started seeing signs that the wild mortgage rate rollercoaster might be easing up. November 2023 saw inflation plunge to 3.9%, its lowest level in years. If inflation continues dropping in 2024, it will give the Bank of England breathing room to halt the frenzy of interest rate hikes. And we’re already seeing mortgage rates respond by leveling off themselves.
In early December, average 2-year fixed rates actually dipped back below 6% for the first time in 6 months. That benchmark rate even skirted 5% briefly – something that seemed inconceivable not long ago. Major lenders like Halifax and HSBC trimmed rates in November and December too. Solo rogue rate cuts have turned into an industry trend.
While rates aren’t yet nearing the ultra-low levels, the sharp upward movement has halted. If inflation continues tapering slowly as hoped, average fixed rates dipping below 5% next year now seems within reason. The outlook is brighter than even a month or two prior.
Who Stands to Win Big?
This dose of interest rates sanity will benefit all buyers and owners – but some are especially primed to win big:
First-Time Buyers
Big rate drops allow more buyers to plunge into home ownership, especially first-timers. Government schemes like 5-10% deposit programmes also ease down payment barriers. Despite higher rates than 18 months ago, first-timer purchasing power could get a measurable boost in 2023. Harness it!
Remortgagers
If your current fixed rate deal expired in 2023, you have a good opportunity to lock savings relative to this past fall. Act fast even if rates continue to inch downward later. Being early ensures you secure a fixed rate before any potential inflation backslides. Getting off scary 6-7% variable rates also gives welcome savings and stability.
Move-Up Buyers
Whether you’re relocating, expanding your living space, or just need a lifestyle change, lower rates rebuild budgets for move-up buyers too. If you’ve idled house shopping waiting for affordability to bounce back from the 2023 damage, your patience might pay off in 2024. Big upgrades could be back within reach.
What Should You Do?
No matter if you’re eager first-timer or stuck-in-place move-up buyer, you could use this rates reprieve to reignite homeownership dreams. The market looks ready to turn the corner from its 2023 inflation panic aftershock. Better rates are likely here to stay through 2024. This is the hope! We are constantly monitoring the situation and advise our clients as soon as there’s significant movements in rates.
If you feel financially prepared now, seize the moment that could be right for you. Lock savings before any outside chance rates somehow spike again down the road. And for goodness sakes, celebrate overcoming this rocky rates era!
Welcome 2024 with renewed hope. It could be the opportunity you’ve been waiting for to jump into homeownership. Contact us today for the best mortgage advice!
Note – The information contained within was correct at the time of publication but is subject to change.