The housing market in the UK is set to face more challenges as we look ahead to what performance could be like in 2024. UK Finance recently published their forecasts for the year, giving more weight to the predictions the experts have been making. To find out more about the outlook for mortgages in 2024, read on.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
In a bid to reduce inflation in 2023, we saw higher interest rates, resulting in increased household and cost-of-living costs, leading to impacted mortgage credit access. Affordability issues also affected remortgaging, sparking an increase in the internal product transfer market. Looking ahead to the new year, it will be crucial for homeowners to ensure they are employing strategies that will prevent them from overpaying on their mortgages.
Key Figures and Projections
Across the entirety of last year, gross lending totalled £226 billion, a decline of 28%. The housing market experienced a fall in lending for house purchases by 23%, while external remortgaging activity decreased by 21%. However, as mentioned, internal product transfers witnessed an 11% increase while new buy-to-let purchase lending fell 53% to £8 billion.
When it comes to 2024 projections, the challenges faced last year still persist, with gross lending expected to fall by 5% to £215 billion, and lending for house purchases anticipated to decrease by 8% to £120 billion. External mortgaging activity is expected to fall by 8% to £202 billion with buy-to-let purchase lending to fall by a further 13% to £7 billion.
These environmental pressures are unlikely to ease significantly enough in the short term, so experts expect lending to remain weak in 2024. It’s not all doom and gloom, though, many believe that a gradual improvement in affordability this year will be reflected in a modest increase in activity levels in 2025.
If you are finding it difficult to keep up with your mortgage payments, be sure to speak to your lender as early as possible to explore the various options they provide help to anyone struggling to make monthly payments.
Buy-to-let activity update
The buy-to-let market has not been unaffected. On top of cost and rate pressures, the buy-to-let market has been hit with taxation and regulatory issues all throughout 2023. The combination of factors means that the buy-to-let market has actually been hit harder than the residential real estate market. New purchase lending fell by 53% last year, with remortgaging dropping by 47%. The forecast for next year doesn’t have the market faring any better, with a smaller contraction predicted, but with the broader challenges for investors remaining.
Moving forward
The good news for many borrowers is that the rigorous affordability tests implemented in 2014 that were designed to ensure homeowners could afford mortgage payments even in challenging economic climates worked just as intended. Lenders are also aware of the circumstances surrounding borrowers and are offering a variety of options to help people stay on top of their repayments, including tailored forbearance options for those facing extreme difficulties.
Work with a mortgage broker for the best rates and options
It’s important to be proactive when it comes to your mortgage; don’t let your inability to pay each month creep up on you. Consider touching base with your mortgage broker for a Mortgage Review to assess your current terms and explore opportunities for cost savings. Professional advice can be exactly what you need to make it through tough times.
For personalised guidance and a comprehensive Mortgage Review, contact Dental & Medical Financial Services. Our experts can advise on optimal timing for remortgaging and ensure that you make informed decisions that align with the market forecast. Contact us to get started.