UK house prices have experienced a market decline over the past several months, with a 1.5 per cent drop in December marking the fourth consecutive month of decline. This downturn is largely attributed to rising mortgage rates, which reached an average two-year fixed rate of 6 per cent in October, a 14 year high.

Although mortgage rates have slightly declined in recent weeks, and are forecast to continue to do so throughout 2023, buyers remain wary as demand shrinks and sellers are forced to drop their asking price.

The increased volatility has made it increasingly difficult for current and potential homeowners to choose the right mortgage deal for them. With fixed-rate mortgages, the interest payable remains constant for the duration of the term, usually two, five or ten years.

Once the term expires, you can either move to the lender's standard variable rate (SVR) or look for an alternative mortgage deal. The recent Bank of England rate increases have made mortgages more expensive, further complicating matters and making it even harder to find a suitable deal.

Interest rates

However, the Financial Times reported that several lenders have recently dropped their fixed-term mortgage rates. Some mortgage lenders have reduced their interest rates, for example, TSB cut its five-year fixed rate mortgages down to 4.99 per cent and Nationwide lowered theirs by 0.55 percentage points to 4.89 per cent.

These decreases are encouraging news for potential homebuyers looking for a good deal, whether these are fixed deals or tracker mortgages. Even though the mortgage interest rate is decreasing slowly but surely with each lender, the Bank of England base rate is creeping up.

If you are looking to remortgage it is highly unlikely that you will find lower rates than your current deal if you have been on that rate for a few years now, due to many interest rate changes. By researching the market and keeping up with news of rate drops, it is possible to find a competitive mortgage that works best for you.

It is important to remember that rates are ever-evolving and staying aware of changes in the housing market can help you make the best decision when choosing a mortgage. Researching your options and understanding the risks and benefits of different mortgage products can help you make an informed decision and get the best deal for your situation. By following these steps, buyers can be sure they are making a sound investment that will benefit them in the long-term.

Having good credit evidenced on your credit report, you will have access to better fixed rate deals and tracker rates as the lender will be able to see you have good management over your monthly finances at the mortgage application stage, therefore, your monthly repayments will be more desirable.

The Bank of England's base rate has had a significant increase over the past year, not everyone has been affected by this as of yet due to fixed terms running over their set period. If the base rate was to continue increasing, the cost of living crisis would only worsen and many homeowners will be forced to sell as higher interest rates are becoming unaffordable.

By understanding the current market and researching their options, potential homeowners can ensure they are making an educated decision when it comes to mortgage choice. With a little bit of effort, it is possible to find the best mortgage deal for your needs.

Mortgage market

By researching the market and keeping up with news of rate drops, potential homeowners can ensure they are making an educated decision when choosing their mortgage product. Speaking to experienced advisors or using online comparison tools can help buyers understand the risks and benefits associated with different mortgage products, allowing them to make an informed decision that works best for their situation.

Keeping up with news of rate drops can also help buyers find the most competitive mortgages available. With a little bit of effort and knowledge, potential homeowners can ensure they are making a sound investment that will benefit them in the long-term.

Why are house prices being reduced?

As we've seen many interest rate rises, people are reluctant to borrow money to purchase or remortgage their homes. There have been price rises in all areas of life such as; bills, food shopping, everyday items and property, it has become increasingly difficult for people to purchase affordably.

This means that people have had no choice but to reduce the selling prices of their homes so the interest in those properties increases. If buyers can't afford the monthly mortgage payments on the property there will be less interest and the property won't sell. Property valuations are already starting to decrease compared to what they were at the end of 2022.

What can we expect?

By following these steps, buyers can be sure they are making an educated decision when choosing their mortgage product. With a little bit of effort, it is possible to secure the best mortgage deal with reasonable monthly payments that fit your personal circumstances.

Making a sound investment in homeownership is one of the most important decisions a person can make, and being aware of the current market can help potential homeowners make the best decision. With a little bit of effort, buyers can ensure they are making an educated decision that will benefit them in the long term.

If you are looking for a mortgage, email [email protected] or call us on 0151 662 0188