Mortgages – live: Price war to hit banks as rates fall below 4%

Average house prices in each region of the UK are revealed in a new index that says that the market “beat expectations” in 2023 despite higher taxes, inflation and the wider cost of living squeeze.

Halifax’s House Price Index said property values increased by 1.7 per cent across the board in 2023, although some regions, such as South East England, saw house prices fall significantly.

Meanwhile in other regions, such as Northern Ireland and North West England, the average price of a home increased in a welcome piece of news going into 2024 for those already on the property ladder.

My colleague Matt Mathers reports:

The Conservatives will seek to cut costs for first-time property buyers in an appeal to younger voters ahead of the general election.

With the cost of mortgages having soared in recent years, housing secretary Michael Gove said the government will “definitely” have a new offer for prospective homeowners in place before the country heads to the polls next year.

Riz Malik, of Essex-based R3 Mortgages, said he thought lenders would be “coming out of the blocks ready to grab market share with some very aggressive pricing” once staff return from annual leave.

“Next week is when I’m expecting the rest of the high street banks to really come out and set their stall for where they’re going to be in 2024,” he said.

“They’ll be going after the remortgage market as well, because 2023 was the year of product transfer – a lot of deals were where people stayed with their lender and renegotiated a new deal as there wasn’t a huge appetite for taking on new business because nobody knew where the market was going.

“I think with everything having settled down from there onwards, a lot of lenders will have been reassured that there haven’t been the big drops in property prices that some people anticipated in 2023.”

Mr Malik warned that economic shocks could quickly make deals “a moveable feast”.

“If a lender does come out with something, it might be time to grab it and then if things do improve later on, then obviously reassess your situation closer to the time.”

Here is more from Sir Howard Davies’ claim that it is not “that difficult at the moment” to get onto the property ladder.

He told BBC Radio 4’s Today programme: “What we saw in the financial crisis was the risk of having people being able to borrow 100 per cent in order to get onto the property ladder, and then suffering severe falls in the equity value of their houses, and having to leave and having a bad credit record.

“So, there were dangers in very easy access to mortgage credit.

“I totally recognise that there are people who are finding it very difficult to start the process, they will have to save more, but that is, I think, inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis.”

The Liberal Democrats also pointed to the impact of frozen tax thresholds on the public, describing 2024 as the “year of the squeezed middle”.

Research by the party suggests that the combined impact of taxes, mortgage rises and food inflation could be a more than £4,700 “hit” on the average household.

The Lib Dems are calling for a cost-of-living rescue package, with the party’s Treasury spokesperson Sarah Olney MP saying: “2024 is set to be the year of the squeezed middle, as families continue to be clobbered by unfair tax hikes, soaring mortgage payments and higher shopping bills.

“People are worried sick about paying the bills and having to make big cutbacks just to get by.

“But instead of helping, Rishi Sunak is hitting families with yet more tax rises while the Conservative Party soap opera continues in Westminster.”

The housing market “beat expectations” in 2023, a lending boss has claimed, with the average UK property value ending the year £4,800 higher than it had been at the end of 2022, according to an index.

Property values increased by 1.7 per cent on average across 2023, Halifax said. Average house prices rose by 1.1 per cent month-on-month in December, the third monthly rise in a row. The typical UK house price in December 2023 was £287,105, up from £282,305 in the same month a year earlier.

Kim Kinnaird, director of Halifax Mortgages, said: “In December, the cost of an average UK home rose for the third month in a row to £287,105, up 1.1 per cent or £3,066, compared to November, reaching the highest level since March 2023.

“The housing market beat expectations in 2023 and grew by 1.7 per cent on an annual basis. The average property price is now £4,800 higher than it was in December 2022.

Lewis Shaw, of Mansfield-based Shaw Financial Services, forecasts that lenders will relaunch mortgage product ranges and reduce rates in the next week or two.

“A price war is on the cards because most lenders missed their lending targets last year and are not going to want a repeat of that, so the likelihood is they’re all going to come out of the gates storming,” he said.

He predicted significant competition, especially around remortgaging, because the 1.6 million mortgages that are due to renew in the next 12 months represent a big chunk of the market.

“So either lenders will become very competitive on their internal rates for existing customers to keep them or they’re going to have to offer better remortgage rates to tempt them away from other lenders, so that will hopefully be positive,” Mr Shaw added.

A record number of sellers put their homes up for sale on Rightmove on Boxing Day, the website reported.

Just over 10,000 homes went on to the market the day after Christmas Day, a record for any Boxing Day and the highest number of new sellers in any single day of the year dating back to 2011, Rightmove said.

The number of buyers contacting estate agents about properties for sale also jumped, and was 17 per cent higher than on Boxing Day in 2022.

HSBC UK has cut rates on its residential mortgage range by up to one percentage point, with several of its rates being below 4 per cent for the first time since last April.

More than 240 separate rates across HSBC UK’s residential and buy-to-let range have been reduced.

An HSBC UK spokesperson said: “Our latest changes mean that we are able to offer our existing customers five-year and 10-year fixed-term mortgages that are below 4% for the first time since April 2023, alongside our lowest rate of 3.89 per cent for existing customers.

“We now also have over 150 mortgage options under 5 per cent for customers, the most we have offered under this level since April 2023.”

TSB also announced cuts to some of its two-year-term mortgage rates from Friday, including reductions of up to 0.55 percentage points for first-time buyer deals and home-mover products.

It is not “that difficult” to get on the property ladder in the UK, the chair of NatWest has said.

Asked by BBC Radio 4’s Today programme when it would be easier for people in the UK to get on the property ladder, Sir Howard Davies, chair of NatWest, said: “I don’t think it is that difficult at the moment.”

Pressed about this, he added: “You have to save and that is the way it always used to be.”

Sir Howard added: “What we saw in the financial crisis was the risk of having people being able to borrow 100 per cent in order to get onto the property ladder, and then suffering severe falls in the equity value of their houses, and having to leave and having a bad credit record. So, there were dangers in very easy access to mortgage credit.

“So, I totally recognise that there are people who are finding it very difficult to start the process, they will have to save more, but that is, I think, inherent in the change in the financial system as a result of the mistakes that were made in the last global financial crisis.”