Buyers Return to the market as mortgage rates fall

Lower mortgage costs and easing inflation are encouraging more buyers back into the market. 20% more people started their property search in December, when compared to December 2022, and 24% more offers for properties were submitted.

The ONS announced that inflation had slowed to 3.9% in November and in January, HSBC confirmed that it was cutting its mortgage rates to under 4% for the first time since April 2023. Reductions have also been announced by Britain’s largest mortgage lender, Halifax, including its two-year fixed-rate re-mortgage, which fell from 5.64% to 4.81% this month.

Research Analyst at Chestertons, David Rees, says: “House hunters often utilise the holiday season to really focus on their property search and the falling interest rates appeared to give buyers more confidence to enter the market in December. This is good news for the market, but it’s important to remember that despite this uplift, there are still far fewer buyers in the market than there were before the Bank of England started raising interest rates.”

Henry Knight, MD of mortgage broker Springtide Capital, adds: “Just before Christmas, we saw a niche lender launching a 3.94% 5-year fixed rate so it was only a matter of time before the larger banks followed suit. With inflation falling to its lowest level since September 2021, there are further speculations about the Bank of England cutting its 5.25% rate over the next few months, which will boost buyer confidence even more.”

As more buyers enter the market, we’re seeing increasing numbers of homeowners looking to sell their property, with offices carrying out 15% more property appraisals in December. There was also a slight uplift (4.5%) in the number of available properties for sale in December year on year.