Good news for home buyers and anyone re-mortgaging

Industry pundits and those in the know are anticipating a brighter outlook for the UK housing market this year. Reassuringly, January has started well; new sellers are coming to market and buyers are still keen to purchase.   

Branch activity is trying to find a new ‘norm’.  As we stated in our January update, whilst we navigate these new levels we will experience a price-sensitive market. 

One of the biggest challenges during this time will be bridging the gap between seller expectations and buyer affordability.   Pricing is critical from the outset and for those motivated to sell, acting on price-sensitive feedback will be paramount to securing a buyer. 

Encouragingly, mortgage approval ratings are on the increase.  Bank of England data shows that approvals rose by 0.7% between November & December to 66,526, which demonstrates increased confidence and stability.  It has also been widely reported that in anticipation of the interest rate cut, mortgage lenders have been cutting rates.  Increased mortgage competition is always a welcomed relief. 

First-time buyer activity is the driving force of continued momentum in the housing market.  For this cohort, affordability is still a big issue though. 

Robert Gardner, chief economist for Nationwide, recently said “A prospective buyer earning the average UK income and buying a typical first-time buyer property with a 20% deposit would have a monthly mortgage payment equivalent to 36% of their take-home pay – well above the long-run average of 30%. Furthermore, house prices remain high relative to average earnings, with the first-time buyer house price to earnings ratio standing at 5.0 at the end of 2024, still well above the long run average of 3.9. Consequently, the deposit hurdle remains high. 

The upcoming Stamp Duty change deadline is driving renewed first-time buyer activity. According to a recent article in Estate Agency Today, first-time buyer activity dominated the market in November, December and January.   This increased activity will lead to a slightly front-loaded year, leaving the preceding months feeling a little muted in comparison. 

So, today’s interest rate cut will be an encouraging step in the right direction and welcomed news for home buyers and anyone re-mortgaging.  The two rate cuts last year added to a degree of stability and whilst this cut doesn’t solve affordability issues overnight, it does add to buyer/seller confidence.  The initial signs are encouraging and bode well for a stable 2025 housing market.   

The Renters Reform will have an impact on the UK housing market this year, the severity of which remains to be seen. Planning reforms continue to make the headlines, but the devil of this will always be in the details.  What impact this is likely to have on the contribution towards the housing target is yet to be seen and we expect there will undoubtedly be a number of test legal cases forthcoming.   

Should you need any help or advice, our team of experts are on hand to help.  Contact your nearest branch for more bespoke information.