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Leading economists predict that the Bank of England’s decision to decrease interest rates will alleviate the impact of higher mortgage payments in 2024.
At the beginning of the year, homeowners are experiencing a more optimistic outlook as lenders are lowering their rates. Some fixed-term contracts are now being offered at less than 4 percent.
According to experts at Goldman Sachs, Britons will still experience a £19 billion rise in mortgage expenses by 2025 due to the expiration of current deals.
The large investment company stated that the prediction was mostly optimistic, especially considering their previous cautions about the UK potentially facing a total of £30 billion in mortgage payments.
Goldman Sachs predicts that the Bank of England will decrease the base rate from 5.25% starting in May, resulting in a faster decline in borrowing expenses than previously anticipated.
According to James Moberly, an economist at the investment bank, there will be a decrease that results in a total increase of £19bn in mortgage payments by 2025. This is significantly lower than our previous estimate of approximately £30bn.
The specialist stated: “The maximum rise in loan payments is expected to occur by the first half of 2024, which is earlier than our previous prediction.”
The outlook is more optimistic for new home buyers as lenders decrease interest rates.
The Resolution Foundation think tank has issued a warning that in 2024, approximately 1.5 million households will need to refinance their mortgages. This could result in the average family having to pay an additional £1,800 per year.
Economists predict that the recent cuts to the Bank of England’s base rate will encourage lenders to provide more favorable deals. This positive outlook was reflected in their estimates at the beginning of the year.
On 1 February, the Bank’s monetary policy committee will convene once more to determine a verdict on interest rates.
Experts predict that the Bank will begin reducing interest rates in the spring season. There are also economists who believe that rates could drop as much as 3 percent by the conclusion of 2024, which is boosting confidence in the market.
However, Torsten Bell, the chief executive of the Resolution Foundation, advises homeowners to keep in mind that some may still experience significant increases in their mortgage payments, despite the fact that they may not be as severe as they could have been.
HSBC recently introduced a highly publicized fixed rate of 3.94% for a five-year term, while other banks such as Halifax and TSB have also announced reductions in their mortgage interest rates. Halifax began the new year by reducing its fixed rates by almost 1%.
According to the Moneyfacts website, the average rate for a two-year fixed deal decreased from 5.92% to 5.87% on Thursday.
We hope that the Bank of England will gradually lower interest rates to promote growth in the housing market, according to Nathan Emerson, Propertymark’s CEO.
Sir Howard Davies, chairman of NatWest, stated that getting on the property ladder is not a difficult task.
In the meantime, Sir Howard Davies, the chair of NatWest, caused surprise by stating that it is not overly challenging to purchase a home in the UK.
During his appearance on BBC Radio 4’s Today programme, he stated that it was possible to purchase a house in the country. This statement prompted presenter Amol Rajan to question if they were discussing the same country or if the speaker was reporting from a different location.
The head of NatWest was criticized by mortgage brokers for not comprehending the struggles faced by young individuals trying to purchase their first home. Stephen Perkins, the managing director of Yellow Brick Mortgages, stated that Sir Howard’s remarks were shameful.
He stated: “It is exhausting to read comments from individuals who purchased their initial house for roughly £10,000, with a small down payment and a mortgage of two to three times their income, and who are completely unaware of the difficulties that first-time buyers encounter when trying to purchase a house.”
A prominent lender has reported that the UK’s housing market exceeded expectations in 2023, as the average property value increased by £4,800 compared to the end of 2022.
In 2023, the average property values saw a 1.7% increase, according to Halifax. In December, there was a 1.1% month-on-month rise in average house prices, marking the third consecutive monthly increase.
In December 2023, the average cost of a house in the UK was slightly above £287,000, which was an increase from approximately £282,000 compared to the previous year.
The Independent is a British online newspaper.
The British online newspaper, The Independent, is the source.
