Compared to recent times, this month brought a sense of relative stability for both the mortgage market and the housing market. With no interest rate rises or sharp increases in house prices for the time being, it’s a good time to assess the new normal and what it means for your home-buying or remortgaging plans. Here’s our monthly breakdown of the latest market figures.
Inflation and interest rates at a standstill
Economists were surprised in September, when headline inflation figures remained the same as August at 6.7%.¹ We saw food prices fall for the first time in two years, but they were offset by rising petrol prices. The Bank of England responded by keeping the base rate at 5.25%.
Despite this, we’ve seen lenders press ahead by gradually reducing rates on their own mortgage products over the last few weeks. We’re unlikely to see significant rate cuts unless inflation starts to fall more sharply, but rates are more competitive than they were six months ago. So, with average fixed rates stabilising around 5%, now could be a better time to look for a new deal. The brokers at Moneybox Mortgages can show you your options, as they compare thousands of mortgages that update daily from over 90 lenders. Head in-app to Accounts > Mortgages to start a conversation with the team.
Mortgage approvals for house purchases continue to fall
We’re seeing the knock-on impact of this year’s increased borrowing costs reflected in the falling number of mortgage approvals for UK house purchases. In September, mortgage approvals nationwide dipped to 43,300 – down from 45,400 in August.²
Borrowers unable to afford repayments at current rates are postponing their plans for now, but Zoopla data shows that the number of cash buyers has actually increased over this period. Around 60,000 more properties were bought with cash this year than during 2022.³ It’s one of the reasons house prices aren’t falling as fast as expected. Borrowers adjusting to the stabilising market landscape are continuing to buy homes and remortgage, hopeful that we’ve already experienced the peak of interest rates.
House price growth slows down as a result
The latest UK House Price Index, which tracks the final ‘sold prices’ of properties in the UK, shows that house prices are currently growing at a much slower rate than we’re used to seeing. Average UK house prices only increased by 0.2% in the 12 months to August 2023, compared to 0.7% in July – and the average property in the UK will currently set you back £291,000.⁴ According to Zoopla, around 80% of regional markets in the UK saw a fall in house prices over 2023 compared with last year.
This market behaviour is rare for recent times, so if you’re a first-time buyer and able to afford mortgage repayments, it might be a good opportunity to bag a discounted property. Many sellers have been strong-armed into dropping their original asking prices in order to attract buyers, so you could benefit from this.
¹ Source: Office of National Statistics (ONS) CPI Annual Rate of Inflation
² Source: Trading Economics, UK Mortgage Approvals for September 2023
³ Source: Zoopla House Price Index for October 2023
⁴ Source: GOV.UK Land Registry (UK House Price Index for August 2023)
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