The UK property market has shown definite signs of recovery this year, gradually overcoming the challenges of a subdued 2023. Consumer confidence is on the rise, spurred by a widely welcomed cut to the Bank of England’s central rate. It feels like we’ve taken the first steps in a promising new chapter, particularly amid healthy competition on pricing among major lenders. Even though there’s still work to be done, the foundations are in place for a strong close to the year and a brighter 2025.
A market finding its feet
Put simply, 2023 was a tough year for the market and those who work in it. In fact, the number of loans granted to home movers last year – 251,000 – was the lowest we’ve seen since 1974. But we’re now beginning to see signs of improvement, with buyer demand for homes ticking up a  fifth higher than this time last year.
While some of this activity can be put down to pent-up demand being released, it’s not the whole picture. The first central rate cut in over four years injected fresh momentum into the market and put us on a healthier trajectory. Lenders have played their part in creating positive market sentiment, particularly with the return of sub-4% mortgage products for the first time since April.
Where do first-time buyers stand?
Despite soaring house prices and historically high interest rates, first-time buyers haven’t given up on homeownership. However, the average first-time buyer now needs a household income of more than £60,000 according to Zoopla – that’s nearly £2,500 more than a year ago.
This group is adapting, either by choosing longer mortgage terms to keep payments manageable or simply holding off until their finances are in the right shape. According to UK Finance, almost one in five first-time buyers were borrowing with a term of over 35 years by the end of last year. Meanwhile, at Legal & General, we’ve found that the average age of first-time buyers in the UK was 33 between April 2023 and April 2024.
Clearly, buyers are still motivated to get onto the property ladder, despite having to extend mortgage terms further and potentially wait longer than previous generations needed to.
A big year for refinancing
Refinancing has been one of the key talking points this year, and it’s easy to see why. Currently, 33% of the business passing through Legal & General Mortgage Club consists of product transfers, compared to historical levels of around 24%. And the trend is set to continue, with the Financial Conduct Authority (FCA) estimating that more than 1.5 million homeowners will have come to the end of their fixed-rate deals by the end of 2024.
October marks the most important month for deal expirations, particularly as the two-year fixed rates set after the mini-budget begins to mature. As those deals wrap up, it’s natural for homeowners to worry about the prospect of locking into new products and higher monthly repayments. However, remortgage options and affordability are expanding thanks to increasing competition among major lenders and a decreasing interest rate environment. In short, all signs point to further positivity in the future.
Brokers can step up by leveraging their expertise to secure the best deals that are tailored to fit each customer’s unique financial situation and goals. With quality advice front and centre of the mortgage process – whether purchasing or refinancing – positive outcomes for consumers are well within reach.
Product innovation
Lenders aren’t just battling it out on price; they’re also bringing innovative products to the table that are making the market more inclusive. For example, Accord Mortgages and Yorkshire Building Society recently launched a 1% deposit mortgage for first-time buyers, requiring a deposit of just £5,000. It’s innovations like these that are bringing homeownership within reach and further invigorating the market in 2024 and into 2025.
The property market has taken a step forward, creating fresh opportunities for advisers, buyers, and sellers. With a lower central rate and a pricing war well underway among major lenders, there’s every reason to remain confident about a more positive close to the year.
As we move forward, broker sensitivity to shifting trends, like the rise of older first-time buyers, will be crucial for delivering tailored advice and the best products. While we must be realistic about the pace of recovery, the pieces are falling into place and it’s up to us to seize the opportunities that lie ahead.
Clare Beardmore is director of distribution and mortgage club at Legal & General Mortgage Club
