Mortgage rates are reducing. For those prospective buyers who have been hesitant amid recent market fluctuations, or for residential property investors that pressed pause in 2023, now is the time to speak to an Adviser as lenders look to add competitive rates to the market.

As one of the largest independent mortgage brokers in the UK, Flagstone Financial Management has access to the whole market. This means that we are in touch with both the major high street banks, and also the smaller, more bespoke lenders several times a day to find the best rates for you.

Why are mortgage rates experiencing a decline?
The unexpected drop in consumer price inflation to 3.9% in November has heightened expectations that the Bank of England might initiate rate cuts from its current benchmark of 5.25% in the first half of 2024. This positive outlook, coupled with a surge in demand for homes following a gentle decline in house prices during 2023 is prompting mortgage providers to enhance the competitiveness of their products in anticipation of increased sales.

What does this mean for residential property investors?
Notably, one of the UK’s best-known platforms for mortgages has significantly reduced its Buy To Let rates by 0.80 per cent. Sub 4 per cent rates have been released to the market in the first week of the year which signals the start of a price war for lenders who are keen to meet the demands of landlords early in 2024. This is excellent news for both existing landlords, and for those that were put off from investing in property due to the uncertainty in the market in 2023.

What is the likely impact of the market conditions at the start of 2024?
When mortgage rates become competitive, several factors come into play in the housing market and financial landscape:

1. Increased Competition Among Lenders: Lenders, in response to market dynamics, may engage in heightened competition to attract borrowers. This competition can lead to innovative loan products and additional perks for borrowers, such as cashback offers or reduced fees.
2. Buy To Let: As lenders continue to lower rates in the BTL and home ownership sectors, the average rates are currently at their lowest levels since June 2023. This mortgage price war reflects a competitive market with rates down approximately one percentage point since their peak meaning that property investment will be a viable option for many in 2024.
3. Increased Affordability: Competitive mortgage rates mean lower borrowing costs for homebuyers. This increased affordability can stimulate demand for housing, as more individuals and families find it financially feasible to enter the property market.
4. Stable Home Prices: As demand for homes increases due to more affordable financing, it can put upward pressure on home prices. In the current market this is likely to mean that home prices remain steady for the first half of 2024. As the market continues to strengthen, sellers may be in a stronger position, leading to potential appreciation in property values.
5. Rising Refinancing Activity: Homeowners often take advantage of competitive rates to refinance their existing mortgages. Refinancing can lead to lower monthly payments, reduced interest costs, or a change in loan terms, providing financial benefits for homeowners.
6. Market Expansion: Competitive mortgage rates may attract a broader range of homebuyers, including those who were previously on the fence about entering the market. This expansion of potential buyers can contribute to a more dynamic and active property market.

Lenders are now actively introducing competitive rates to the market. If you have been considering your options, then speak to one of our expert mortgage advisors today by calling 0808 304 3506 or emailing webenquiries@flagstone.co.uk

Flagstone Managing Director John Lineham shared his mortgage predictions for 2024 over the festive period which you can find here.