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Article by Felicity Barnett of The Money Brain

Steadying mortgage rates

One of the most significant recent developments in the UK mortgage market is the stabilisation of mortgage rates. Over the past few months, there has been a noticeable shift away from the frequent fluctuations . The stability is attributed to the Bank of England’s proactive measures and its optimistic economic projections, which indicate a possibility of an earlier-than-planned reduction in the base rate.

Fixed-rate mortgages have seen consistent decreases in recent months following a ten year high throughout the summer of 2023. November saw a typical 90% LTV 5-year fixed rate with Nationwide at 4.85% but as I write today (08/02/2024) Virgin Money are offering a 5 year fixed rate at 90% LTV of 4.40%.  On a typical house price of £350,000 over a 35 year term this is a monthly saving of £83 pcm.

Market Dynamics and House Prices

The UK property market continues to prove to be resilient. The Halifax House Price Index, a widely respected indicator, reports a robust 2.5% annual increase in house prices. January witnessed a noteworthy 1.3% monthly surge, adding to the positive sentiment surrounding the housing sector.

The Stability Conundrum

With mortgage rates steadying and fixed rates reaching a plateau, the challenge for potential buyers lies in determining the optimal moment to enter the market. Historically, the ebb and flow of interest rates have been a significant factor influencing the decision-making process.

The current stability in mortgage rates, coupled with the potential for a base rate reduction makes this  seem like the right  time, once again  to buy, especially as house prices are on the rise again. It is a delicate balance between mortgage rates and house prices. But with confidence returning to the market early 2024 presents an opportune moment to jump in before the Spring surge.