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Your January market update

If one of your new year's resolutions was to stay on top of what was going on in the property market, we’ve got you covered.

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We have some snappy updates on how the year has started in the property world, plus some forecasts for the year ahead: from house price predictions to mortgage rate updates. Plus we’ll dive into the “price war” between mortgage lenders — what is it? And how can you leverage it to find the best mortgage rate for your situation? So here’s hoping that with a little help from Strike, your 2023 property goals will be easier to keep to than those Dry Jan and Veganuary aspirations. (Anyone else started saying “It’s February somewhere?!”...just us? Cool.)

What's going on with house prices?

It’s one of the questions on everyone’s lips as we approach the end of the first month of 2023 (The other questions are: “Are eggs Vegan?” and “Does it count as going to the gym if I just sit in the sauna?”). 

The answers? Eggs aren’t vegan, yes the sauna counts, and, well, house prices are a contentious issue. With the instability of the economy due to several factors — including the war in Ukraine, post-Covid recovery, Brexit, the mini-budget of October 2022 and the fight against inflation — the property market is still trying to level out. This has led to experts disagreeing over whether house prices will stay the same, drop, or even slightly rise. Whilst Rightmove is saying that asking prices for UK homes are on the up after the "mini-budget" shock of October 2022, and The Telegraph are reporting on the biggest 'New Year bounce' since 2016 as demand for properties starts to rise, Lloyds Bank CEO is predicting that house prices will  fall by up to 10% this year.

So what’s the takeaway? With the cost of living crisis still affecting everyone’s daily life, and interest rates still unpredictable, nobody is 100% sure what will happen to the market. Annoyingly, it’s a wait and see situation. Luckily we’ll be here for you every step of the way; we’ll be breaking down the main property headlines on our social channels every Friday though, so you never have to miss a beat.

And what about mortgage rates?

One potential relief to those who are looking to buy this year — f especially those who had to put their first homes on pause as mortgage rates soared at the end of 2022 — is that mortgage rates are levelling out, and even dropping in some cases. While the economy is definitely still unstable, with interest rates still remaining high because of the cost of energy and inflation rates, there are some glimmers of hope in the form of mortgage rates dropping back down. 

Why is this happening? Well, price surges in mortgage interest rates came following the mini-budget of 2022, and the Office for National Statistics is predicting that 1.4 million people will still be facing interest rate rises when they re-mortgage their fixed rate agreement in 2023.The majority of those remortgaging this year will have been on  an interest rate of below 2%, and it’s safe to say deals won’t be that sweet for a while. But it’s not as bad as some predicted it would be last year.In fact, TSB, First Direct and Nationwide all reduced the cost of borrowing recently, with some dropping rates by more than 1% in the last month.

Why are rates dropping? Largely because of what is being referred to as the “price war” following the slowdown in mortgage approvals and the end of last year. What does “price war” mean? Well, say you’re at a car boot sale and lots of the stalls are selling a similar lamp: one vendor gives you a couple of quid off — you’ll go to them right? But then the seller at the next stall sees that they’re losing valuable business — they want to sell that lamp! So they reduce it by £2.20, 20p less than their neighbour. This continues until all the lamp-sellers are competitively edging down their prices to try to lure you into THEIR stall above anyone else’s. That’s a price war, and the same thing is happening with mortgage lenders, leading to major banks cutting their rates on 100s of mortgage deals.

So, while the mortgage interest rates will still be higher than last year and the year before, things are less doom and gloom than at the end of last year, when inflation was at its highest level since the 1980s. The Bank of England’s next meeting is on February 2nd — yet again, they’ll decide on interest rates. What they decide affects not only mortgages, but also house prices. And remember: whether your mortgage is due up or you’re not sure what your home is worth in the current market, we’re here to help.  Stay tuned, and don’t forget to reach out to us if you have any questions.