A Year in Review: The UK Mortgage Market in 2024
As 2024 draws to a close, the UK mortgage market presents a landscape shaped by shifting house price trends, evolving buyer behavior, and broader economic dynamics. Here’s an overview of the market, its highlights, and what it means for homeowners, buyers, and investors.
House Price Trends
The housing market showcased mixed signals in 2024. According to the UK House Price Index, house prices increased by 2.9% between September 2023 and September 2024. However, on a seasonally adjusted basis, there was a slight 0.1% decrease in average house prices between August and September 2024, hinting at cooling in the latter months.
Growth was not uniform across the UK. Regions such as the North East, Northern Ireland, and Scotland experienced robust growth, while London saw house prices decline—a trend reflective of affordability pressures and changing preferences among buyers.
Mortgage Approvals: A Resilient Recovery
One of the standout features of 2024 was the resurgence in mortgage approvals. The Bank of England data revealed a significant uptick, with 68,303 mortgage approvals in October 2024—a 42% increase from October 2023 and a 3% rise from the previous month.
This recovery can be attributed to:
Improved consumer confidence amid stabilizing interest rates.
A rush among buyers to secure properties before any potential tightening of lending conditions in 2025.
Seasonal factors typically boosting activity in the final quarter.
Mortgage approvals have historically been a leading indicator of house sales, and the 2024 data suggests continued momentum in transactions as we move into 2025.
House Building: Growth Amid Regulatory Shifts
The housebuilding sector showed mixed performance in 2024:
Completions rose significantly, with 42,590 houses completed in England in Q2 2024, marking a 12% increase compared to both the previous quarter and Q2 2023.
Starts, however, saw a sharp decline, with 22,990 starts in Q2 2024—a 65% decrease from the same period in 2023. This dip is attributed to housebuilders frontloading projects in 2023 to avoid compliance costs with new building regulations introduced in mid-2023.
These new standards, focusing on energy performance and electric vehicle charging, have set the stage for a greener housing market but created short-term disruptions.
Regional Disparities
Regional dynamics played a significant role in shaping the 2024 housing market:
The North East and Scotland benefited from relative affordability, attracting both first-time buyers and investors.
Northern Ireland continued to see strong growth, bolstered by lower average house prices and a resilient local economy.
Conversely, London experienced declines as higher interest rates and affordability constraints led to a cooling of demand, particularly in the high-value segments.
Looking Ahead: Trends for 2025
As we step into 2025, several factors are likely to influence the mortgage market:
Interest Rate Trends: While the Bank of England’s policies have helped stabilize rates in 2024, any future changes will directly impact affordability and borrowing decisions.
Economic Conditions: Inflation trends and wage growth will play a pivotal role in shaping buyer confidence.
Regulatory and Environmental Standards: The shift towards sustainable housing will likely accelerate, with builders and buyers adapting to new norms.
Conclusion
The UK mortgage market in 2024 has been a year of recovery and recalibration. From the resurgence in mortgage approvals to the regional variations in house prices and the impact of regulatory shifts on housebuilding, it has been a dynamic period. As we look to 2025, Hybrid Financial stands ready to guide buyers, homeowners, and investors through this evolving landscape, ensuring they make informed decisions in a complex market.
For tailored advice and support, reach out to our team—we’re here to help you navigate the mortgage market with confidence.
