Should I buy a house in 2024?
✅ Fact checked by CeMAP qualified advisor
Getting on the property ladder felt more challenging than ever last year. House prices fell ever so slightly, but due to rising mortgage rates and a cost of living crisis, many potential buyers put their homeownership dreams on hold. But 2024 is a different matter.
Mortgage rates are falling - after almost 3 years of base rate rises from the Bank of England. Halifax, HSBC, First Direct, and TSB have all slashed their rates in the first few weeks of 2024, with other lenders expected to follow as many have withdrawn deals to reprice.
For now, the best rates are reserved for existing homeowners and those with large deposits, but over the coming months lenders will probably introduce more affordable deals for first-time buyers too.
What is happening to interest rates?
Currently, mortgage interest rates are coming down, although slowly. At the moment, the average 2 year fixed rate mortgage is around 5.1%, while the average 5 year fixed rate is 4.86%. This is down from the peak in July 2023, when the average 2 year fixed-rate was 6.86%, but still a lot higher than December 2021 when it stood at 2.34%. Although mortgage rates are expected to fall further over 2024, there is no guarantee that rates won't go back up again in the coming months.
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Will house prices fall in 2024?
The latest property price figures show house price growth is slowing down - annual house price inflation stands at -0.3%, up from -1.4% back in October 2023. House prices could continue to fall in 2024 if mortgage interest rates stay high, which will make it less affordable for many to get on the ladder. This will reduce buyer demand, putting downward pressure on house prices. Although some think prices will stay fairly stagnant for the rest of 2024, some think house prices will fall between 2-4% over the next 12 months. Last year, the Office For Budget Responsibility predicted that house prices would drop by as much as 10% between 2023 and 2025. However, some forecasts have been revised to show a positive outlook - property giant Knight Frank now expects house prices to rise this year instead, but only by 3%.
If house prices and mortgage rates continue to fall, this could make it easier for first-time buyers to finally get their foot in the door - particularly those who make the most of innovative first-time buyer schemes or have family support.
However, it’s impossible to predict what will happen over the next year. Political events, such as the UK election, could impact what help there is for first-time buyers, while hostilities in other countries could have a knock-on impact on UK inflation, for example by disrupting supply chains.
Learn more: House price and mortgage predictions for 2024
“It’s set to be an interesting year. Inflation is already cooling, which should cause rates to fall more, especially if the base rate does reduce as expected. However, there are other events which could impact this - the US and UK elections, as well as the hostilities in Ukraine, Gaza and Yemen.”
Perry Graces
Senior Mortgage Broker at Tembo
Will rent go down in 2024?
The cost of rent is unlikely to go down in 2024, due to high demand for rental properties. In fact, the average rent is still increase - annual rent inflation stands at 7.8%, with the average UK rent now £1,223 per month. This makes it harder for renters to save a deposit and buy a home of their own.
While mortgage rates may seem high right now, a good way to look at it is in contrast to renting. Paying off your mortgage each month reduces the size of your home loan and increases the amount of property wealth you own. Yes, the interest you pay each month to your lender may seem high due to current mortgage rates, but if you fix your rate for 2-5 years you’ll know exactly how much you’re going to pay. In comparison, if you continue renting, your monthly rent could go up each year by 5-10%!
If you’re struggling to save a 10% deposit because of rising rental costs, there are options available. If you’ve paid rent on time and in full for 12 months, it may be possible to borrow 100% of a property’s value, thanks to Skipton’s Track Record Mortgage.
There’s also shared ownership, which makes it easier to get on the property ladder with a small deposit. Instead of buying a home with a standard mortgage, you’ll part buy, part rent a property. You’ll take out a small mortgage on the percentage of the property you own while paying rent on the remaining amount. This can be a more affordable option, particularly if you live in an expensive area such as London.
There’s also the No Deposit Rent to Own scheme, which lets you build up equity in a home without needing any deposit at all! Your provider will buy the home on your behalf, which you’ll then rent from them for a fixed amount for a set number of years. Your monthly payments will be made up of rent and a small equity payment which will be put towards the property.
You can also boost your deposit size through family help. With a Deposit Boost, a loved one can unlock money from their own property to gift to you, which they will then pay back through a small mortgage.
See how you could buy sooner
To see what options you’re eligible for and your max buying budget, create a free Tembo recommendation today.
Should I buy a house now or wait until 2025?
Whether you should buy a house in 2024 or wait until next year depends on your own finances, current living situation and goals - but in general right now there is a window of opportunity for buyers. Even if house prices do increase this year, they aren’t likely to go up by much. Although there is pent-up demand due to buyers holding off until this year to buy, supply is still outstripping demand. The number of new houses coming to market is 15% higher than this time in 2023, outpacing the 5% increase in demand. This means buyers looking to purchase in 2024 are in a strong position to negotiate on price, and take more time to choose a home that’s right for them.
When deciding if you should buy a house now, here are a few things to consider:
How much have you saved for a deposit?
If you’ve saved a deposit of 10% or more, buying a house this year could be a good idea. This is particularly true if you’re currently renting. By buying your own home sooner rather than later, you could save money on rent and start building equity in your own home. Buying a home in this year could also help you avoid getting priced out if property prices rise instead of fall.
Don’t worry if you’ve saved less than 10% or you don’t have a deposit at all. At Tembo, we specialise in helping home buyers boost their borrowing power or purchase with a small deposit saved through a range of specialist buying schemes.
Learn more: How to get a mortgage with no deposit or a low deposit.
Do you have a good credit rating?
If you have a good credit score, you’ll find it easier to buy a home in 2024 and have access to better mortgage deals. If you’ve struggled with debt in the past and this is reflected in your credit report, waiting until 2025 can set you up for a more affordable mortgage in future if you take steps to improve your score.
Can you afford the interest rate?
With mortgage rates falling, in the coming months, you may find it easier to get a mortgage and manage your monthly repayments than you would if you’d bought a home last year. But we don’t know for sure what the future holds. Although mortgage rates are predicted to fall in 2024, they could fall even more in 2025 — or they could go the opposite way and increase again.
Get expert mortgage advice
Here at Tembo, we specialise in helping people increase their mortgage affordability so they can buy sooner or remortgage onto the best deal for them. In fact, on average our customers boost their buying budget by £82,000! To get started, create a free Tembo recommendation. Then, book a free, no-obligation call with one of our award-winning advisors to talk through your options.
