2023 proved to be a difficult year for many homeowners. A large proportion had to remortgage onto products with significantly higher interest rates whilst others had to reduce their asking price several times to secure a buyer. It was a far cry from the height of the market in 2021-2022 but 2024 is looking to be a far better place for the everyday property owner.
Our Property Practice Group Leader, Andrew Hiesley, explained that the main issue faced by our clients in 2023, whether existing homeowners or new buyers, was the sharp rise in interest rates. Those who had only taken a step onto the property ladder since 2009 had only known interest rates at sub-three percent levels, so being confronted with rates in excess of 6% was a shock.
Much has been written about the cause of this change, but the result has been hard felt by millions of people across the nation.
Andrew explained that we have seen one clear move by borrowers to combat the increase in rates: extending the term of the mortgage. It’s now common place for borrowers to arrange a mortgage over 35 years, as opposed to 25 years which was the norm going back 5 years and beyond. Whilst this does have the desired effect of lowering monthly payments, Andrew does offer a word of warning to clients, ensuring they consider how mortgage payment obligations could affect them in the later years of their life.
Despite the higher rates and lower house prices, we have seen good levels of activity in the market, helping a large number of people sell, buy and remortgage their homes. Some clients have taken advantage of good opportunities to purchase and those who have been looking to upsize have been able to counteract any concession on their sale with some good negotiating on their onward purchase.
In the first weeks of the new year we have seen lenders reduce rates further, offering mortgages under 4%, which is a real improvement for borrowers and can only prove to have a positive impact on the market as a whole as we move into 2024 and what is anticipated to be a far more positive year for property owners.
No matter what your property needs are for the year we can help.
Property Practice Group Leader, Heringtons Solictors