Mortgage Rates Plummet: A New Era for UK Homebuyers?
The UK housing market is witnessing a significant shift, and it’s all thanks to the intense competition among mortgage lenders. As a result, mortgage rates have plummeted, making it an attractive time for homebuyers to enter the market. In this article, we’ll delve into the implications of this trend and what it means for the future of UK house prices.
A Reversal of Fortune
Just a few months ago, Savills, a leading property company, predicted a 3% drop in UK house prices in 2024. However, with the recent decline in mortgage rates, they’ve revised their forecast to a 2.5% increase. This dramatic shift is a testament to the power of competition in the mortgage market.
“The outlook for 2024 has improved since our last forecasts as mortgage costs have nudged down slightly and are much less volatile.” - Lucian Cook, Head of Residential Research at Savills
The Impact on House Prices
So, what does this mean for house prices in the UK? According to Savills, the average price of a home is expected to rise by £61,500 over the next five years, reaching £346,500 by 2028. This growth is expected to be driven by increased activity in the market, as lower mortgage rates make it more affordable for buyers to enter the market.
Regional Variations
While London is expected to see a 14.2% rise in prices over the next five years, the north-west of England and Yorkshire and the Humber are predicted to experience growth of around double that. This regional variation highlights the complexities of the UK housing market and the need for a nuanced approach to forecasting.
A Word of Caution
While the current trend is undoubtedly positive, it’s essential to acknowledge the potential risks. Rising prices this year may lead to further problems with affordability in the future. As Lucian Cook notes, “The highly competitive nature of the mortgage market has meant that lenders have fairly aggressively priced in the prospect of cuts in bank base rate, causing buyer confidence, and prices, to recover somewhat.”
UK house prices are expected to rise over the next five years
Conclusion
The UK housing market is in a state of flux, and the recent decline in mortgage rates has injected a sense of optimism into the market. As we look to the future, it’s essential to remain vigilant and aware of the potential risks and challenges that lie ahead. One thing is certain, however - this is an exciting time for homebuyers and sellers alike.
Mortgage rates have plummeted, making it an attractive time for homebuyers
House prices are expected to rise over the next five years
