Navigating the mortgage market in 2024 is likely to be an uncertain, challenging task. The big question on everyone’s mind is whether interest rates will continue to fall or if the Bank of England will hold or reduce the base rate of interest. With these variables in play, potential homeowners need to stay updated on market trends and consult with financial experts to make informed decisions about their mortgage options.
What you Need to Know in 2024
Current market trends and conditions
There is no crystal ball to determine how the mortgages will behave, or what interest rates will be in 2024, it seems likely that the peaks of mortgage rates seen during 2023 are behind us, at least for now.
The reducing cost of fixed rate mortgages has been possible due to the continuing, if sluggish, fall in inflation and the stabilistaion of the Bank of England’s base Rate of interest.
These factors mean that fixed rate mortgage deals have fallen below 5% with some lenders in November, which is encouraging news for consumers.
If the downward trend in inflation and the Base Rate continues into 2024, lenders should begin to view lending with renewed confidence, encouraging them to lower rates further as we move through 2024.
The Bank of England Base Rate has risen 14 times since 2021, but has been steady at 5.25% since August.
If the Base Rate stays at its current rate, or the BofE begins to reduce the rate during 2024, we would expect to see mortgage rates continue to fall, particularly for those applicants with strong loan-to-value rates.
More developments are needed in the economy before mortgage rates start to reduce significantly.
The Bank of England will need to be much closer to its 2% inflation target with a prolonged period of stability in inflation rates before it begins to reduce the Base Rate to anywhere near previous levels. We don’t expect the base rate to reach anywhere near the record lows it has reached over the last few years.
SONIA rates, the rate that lenders borrow Sterling from other financial institutions, will also have to fall considerably.
Mortgage lenders continued to reduce rates in November in an attempt to meet their year-end targets, but these are now slowing as the end of 2023 approaches. At the beginning of 2024 we will see the continuation of this story, and what lenders are prepared to do to compete with each other by offering competitive rates.
Impact of economic factors on mortgages in 2024
Inflation has a significant impact on mortgage rates. When inflation rises, mortgage rates tend to follow suit and increase as well. This is because lenders need to account for the eroding value of money over time. On the other hand, if inflation falls closer to the Bank of England’s target of 2%, it can lead to a reduction in interest rates for mortgages. If inflation is kept under control then mortgage rates will be favourable for borrowers. If not, rates increase and less people borrow.
The Bank of England base rate, which has remained at 5.25% since August, must fall before mortgage interest rates can fall significantly, although there has been some movement in mortgage rates over the last few months as lenders seek to introduce competitive products to maintain lending.
The Ukraine war and the Israel/Palestine conflict can have an impact on the UK economy as well. These global events can create uncertainty and affect investor confidence in the UK markets.
As a result, mortgage interest rates may fluctuate due to changes in demand and risk perception. It is important to closely monitor these geopolitical situations as they can have potential implications for the UK economy and knock on to the housing market.
Key Considerations for Borrowers in 2024
Mortgage eligibility criteria
Mortgage lenders have their own set criteria when deciding whether to lend to you or not. these criteria often change based on confidence in the market, the state of the economy and other factors.
This means that if one lender rejects you, another might not. However, you shouldn’t make multiple applications at once because this can affect your credit rating.
Generally, a lender will be looking at:
- The size of the mortgage you want to take out
- The value of your deposit(or equity in your current home)
- The type of property you want to buy (certain properties, such as listed buildings or properties above commercial or retail properties are considered higher risk)
- Your employment status whether employed, self employed or retired, the length of time in your job, or the stability of your business
- Your credit rating
- Your affordability
The cost of living crisis, high interest rates, and inflation have meant that lenders have adjusted their lending criteria more than once over recent years. This has contributed to a fall in borrowing in 2023.
Available mortgage products and their features
According to Moneyfacts, in November 2023, the average lifespan of a mortgage deal was only 20 days. While up from a record low of 12 days in July 2023, it it did put pressure on borrowers to take decisions quickly just in case another deal wasn’t forthcoming. This is where a mortgage broker can assist.
Benefits of Hiring a Seasoned Mortgage and Protection Broker
Expertise and knowledge of the mortgage market in 2024
A seasoned mortgage and protection broker plays a crucial role in helping individuals navigate the complex world of mortgages. With their in-depth knowledge and experience, they are able to stay abreast of current market conditions and provide accurate advice based on the personal circumstances and requirements of each borrower.
They assist in helping clients understand the market, its long-term outlook, and their affordability, ensuring informed decisions are made.
Guidance in identifying the right mortgage options
A professional mortgage broker is your key to finding the right mortgage options. With their expertise and access to the entire market, they can provide valuable guidance and help you navigate through the available choices. Not only can they offer expert advice, but they also have access to mortgage products that may be more competitive or better suited to your specific needs. Trusting a mortgage broker ensures you make informed decisions and find the best mortgage solution for you.
Navigating the Mortgage Application Process
Documentation requirements
When applying for a mortgage, it’s important to gather all the necessary documents to avoid delays or rejections. To start with, make sure that you have thoroughly reviewed your credit file for any errors.
Next, compile all the requested information, such as proof of income, bank statements, and identification documents.
Lastly, ensure that all the application forms are completed fully and accurately.
Working with a mortgage broker can streamline the process, as they can help manage the applications and maintain relationships with lenders.
Steps involved in the application and approval process
Once you have gathered together all of the necessary documents and information, you’re ready to go.
Submit your mortgage application, including details about the property you wish to purchase, your income, and any outstanding debts.
The lender will review your application, verify your financial information, and assess your creditworthiness. They are also likely to require a valuation survey and other information relating to the property, its type and condition
Once all the necessary checks have been completed, the lender will decide on your mortgage application and inform you of the outcome.
Don’t be tempted to make multiple applications as this can impact your credit file. You can also make use of eligibility checks with some leaders who may carry out a “soft” credit check, which will not affect your credit file.
Mortgage Protection in 2024
Importance of mortgage protection
Mortgage protection is crucial because it provides a safety net for you and your loved ones. It ensures that if you are unable to make your mortgage payments due to unexpected circumstances like illness, incapacity, or even death, your family will be able to stay in the family home. Having this protection in place gives you peace of mind and reassurance, knowing that you have a backup plan in case the unexpected happens.
Options for protecting the mortgage in case of unforeseen circumstances
There are various types of protection, some of which may apply to you, so it’s important to take advice from a professional to ensure that you and your family have adequate cover. You may wish to take out a range of protections including life cover, critical illness, income protection and so on. Your job may give you some clues too. If you work in a high-risk environment, you may wish to consider certain options, as opposed to someone who works in a low-risk job.
The health of your parents and other relatives may also be a consideration too.
Whatever you choose, it’s important to cover yourself and your family in such a way that should something happen, your mortgage payments and your home are protected fully.
Recap of the key insights for navigating the mortgage market in 2024
Navigating the UK mortgage market in 2024 can be made easier with the insights shared in this blog.
As a seasoned mortgage and protection broker, I’ve observed some important trends. It’s crucial to be aware of the evolving mortgage eligibility criteria and the range of available mortgage products.
Fully understanding your own requirements, how to best leverage your borrowing and timing your borrowing both in terms of when you borrow, and how long for, are also important considerations.
Understanding the mortgage application process and exploring mortgage protection options are also essential steps for a successful journey in the mortgage market.
Whatever you are borrowing for, whether its for a first home, new home, or extending your existing home, knowledge and sound advice are critical to your success. Our team is here to help, so drop us a line if you do need advice and guidance.
Liddle Perrett Disclaimer
The information provided in this article was correct at the time of publication (April 2023)
Liddle Perrett Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Navigating the mortgage market in 2024 can be made easier with these key insights. As a seasoned mortgage and protection broker, I’ve observed some important trends. It’s crucial to be aware of the evolving mortgage eligibility criteria and the range of available mortgage products. Understanding the mortgage application process and exploring mortgage protection options are also essential steps for a successful journey in the mortgage market.