2023 was challenging for the property sector, with high mortgage rates and falling house prices summarising market activity that Nationwide called “weak throughout [the year]”.

Despite house prices falling by 1.8% and wages rising by 8.5% (as measured as part of State Pension triple lock calculations) mortgage rates finished the year three times higher than in 2021.

The outlook, though, is generally more positive for 2024 and into 2025. Keep reading to find out more about the potential mortgage and property landscape in 2024, and what it might mean for your employees.


Mortgage rates are likely to fall but a drop is dependent on multiple factors

With mortgage rates high currently, forecasters generally agree that a fall is likely in 2024.

Commercial property firm CBRE expects the average rate on a 75% five-year fixed product to fall to 3.82% by the end of 2024. This would mark a 1.04% drop from the same period in 2023.

CBRE expects rates to continue falling over the next five years, going so far as to predict an average rate of 2.99% by Q4 2028, for the same 75% five-year fixed product.

Homeowners Alliance also predict a fall in mortgage rates, with the caveat that the rate drop might take longer than originally predicted and will be dependent on multiple factors.

One such factor is inflation and its link to the Bank of England (BoE) base rate.

From a historic low of just 0.1% during the coronavirus pandemic, the base rate increased in December 2021, and then at 14 consecutive meetings of the BoE’s Monetary Policy Committee (MPC).

It reached 5.25% in August 2023 and the MPC has so far voted to maintain it at this level five times.

Recently, when hopes increased of an imminent base rate drop, mortgage rates began to fall, highlighting the intrinsic link between the two. In March 2024, though, forecasters rowed back on their base rate predictions and mortgage rates increased.

Capital Economics, among other experts, now expects the first interest rate cut to occur in June, with the rate falling to around 3% by Q4 2025.

Base rate drops, though, are dependent on inflation remaining low and returning to the BoE’s 2% target. The latest MPC summary sees the Consumer Prices Index reach 2.3% in two years and 1.9% by 2027.


Falling mortgage rates should stimulate the market with house prices set to rise in 2025

Falling mortgage rates should mean improved affordability for buyers. In turn, this is expected to stimulate the market in 2024.

Historically, similar falls in mortgage rates have resulted in higher numbers of mortgage approvals, with CBRE quoting an average rise of 11%. That would equate to a total of 642,000 mortgage approvals in 2024, a rise of 66,000 compared to 2023.

While this could mean a short-lived return to affordable mortgages, increased sales could lead to an inevitable rise in house prices.

The average UK house price at the end of 2023 was £283,580 but CBRE expects prices to drop in 2024, finishing the year at £280,890.

Accurate forecasting isn’t easy in the current climate, a fact underpinned by the variations in expert house price predictions. The Times Money Mentor finds that:

  • Zoopla expects a 2% fall
  • Savills anticipate a 3% drop
  • Knight Frank expects a rise of 3%.

It’s worth noting that Knight Frank’s forecast marks a huge shift from the 4% drop it previously forecast.

Savills, Lloyds Bank, and CBRE all expect prices to rise from 2025. The latter forecasts an average house price rise to £292,226 by Q4 2025, and £327,510 in 2028 (the end of their forecast period).


Whether now is the right time to remortgage will depend on your employee’s circumstances 

Forbes reports that approximately 1.5 million fixed-rate mortgage deals will expire in 2024. If any of your employees are affected, they will need to decide between remortgaging or transitioning to their lender’s standard variable rate.

In this scenario, remortgaging (as long as they shop around and speak to the professionals) could save them money.

Your employees might opt to remortgage with their existing lender. While this could remove the need for an affordability assessment, they won’t necessarily be getting the most suitable deal from across the market.

Ideally, they should start to look for a new deal long before their current fixed rate ends, giving them the chance to lock in the most favourable deal.

Morningstar confirms that around 5 million homeowners will see their mortgage payments rise over the next two years so careful budgeting and a robust financial plan are key.

Get in touch

As an employer, ongoing financial education can be beneficial. If you’d like to learn more about how you can support your employees with their financial wellbeing, we can help.

Email info@second-sight.com or call us on 0330 332 7143.


Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it. Think carefully before securing other debts against your home.

You may have to pay an early repayment charge to your existing lender if you remortgage.


Sources: https://www.nationwidehousepriceindex.co.uk/reports/house-prices-fall-1-8-percent-over-the-course-of-2023