Could the property market be heating up despite the cold weather? How Will Reduced Mortgage Rates Affect The Property Market?
Whilst it has not been as busy as its Spring counterpart the first few weeks of the year have shown great potential with a number of new valuation enquiries and a buzz of new interest around our on the market properties. Rightmove have reported a 5% rise in buyer activity and a 15% jump in new properties launched to the market compared to the same time period last year.
Tim Bannister, Rightmove’s Director of Property Science commented the following,
“After a stop-start market in 2023, the initial signs suggest a smoother year for movers in 2024. More new sellers are now entering the market, and with more confident pricing. While the increased level of buyer activity that we’re also seeing may justify some of this increased pricing confidence from sellers, it’s important that sellers who are keen to find a buyer don’t get carried away with New Year enthusiasm when setting their price expectations.''
Whilst it is impossible to say what the next 12 months will bring, without the forecasting powers of a certain infamous mystical orb the early signs of 2024 have shown some promise for a more auspicious property market in 2024.
Four of the largest banks Halifax, HSBC, TSB and Natwest have recently cut their interest rates. Both 2 and 5 year fixed rate mortgages are now at their lowest in almost 7 months with mortgage approvals being at a 7 month high. The Bank of England base rate saw regular rises in 2023 reaching the current rate of 5.25%. This rate which has remained at this level since September is not expected to rise further and it is predicted to gradually decline with the hope of a reduction to 4.25% by the end of 2024. The recent slight rise in inflation to 4% last week, is not expected to affect this. With more Mortgage lenders showing greater confidence in the market by offering lending with a 5% deposit, the ready availability of lending and the leveling of interest rates coupled with the almost certainty that interest rates are not going to suddenly drop to pre-Truss levels may provide enough confidence for purchasers to move forward with the property search they have been putting off.
Sellers of properties that have been on the property market for some time may need to be realistic with their pricing as some buyers are setting their financial sights slightly higher after sensing opportunity to negotiate to ensure they find the correct property.
Sellers coming to market in the New Year resulting in larger property volumes with greater variety is an opportunity for buyers to find the right property.
According to the Rightmove House Price Index, monthly property prices in Scotland as a whole are down 1.3% for January from the previous month however property prices are actually up 5.3% from last year. The new year has seen a welcome increase in buyer registrations, which will lead to more viewings and hopefully subsequent sales. Caution needs to be advised and vendors need to ensure that their expectations are in line with the current market trends and not those of a previous sellers’ market.
On that, those sellers that are more exposed to the mortgage market may see a further correction on prices, especially in areas where the supply outstrips the demand. This may not be as negative as it sounds as movers should also benefit from a correlated decrease in the property they are purchasing.
Selling/buying property can be expensive so it is always best to have your finances and legal parameters in place to know exactly what your spending capacity and options are, as there are numerous options out there.
In summary 2024 should hopefully bring more stability to the property market. The expected calming of inflation and associated de-escalation of mortgage base rate will hopefully bring with it a calmer and more certain Selling and Purchasing experience.
Please come and visit us or get in contact with Blackwood & Smith for all related selling and buying advice. We are the oldest established solicitor estate agents in the Scottish Borders, and all of our staff have local knowledge about the market.
Kenny Laing
Head of Estate Agency
