According to figures published this morning, inflation fell more than expected in November, decreasing to 3.9% from 4.6% in October.
With the base rate potentially set to be cut sooner rather than later in 2024, many commentators have predicted the return of a sellers’ market.
In light of these figures, free news agency Newspage asked experts if the window of opportunity was starting to shut for first-time buyers.
Darryl Dhoffer, mortgage expert at The Mortgage Expert, said: “The latest drop in inflation has significantly increased the prospect of a rate cut in early 2024.
“I expect Threadneedle Street to bring out the scythe and reduce the base rate in the spring.
“For first-time buyers, the window isn’t going to slam shut quite yet, but if the economy takes a nosedive in 2024 and the Bank of England cuts, all bets are off.
“The buyers’ market could be a sellers’ market in the blink of an eye.”
Craig Fish, director at Lodestone Mortgages & Protection, said: “Inflation falling rapidly along with mortgage rates is a sure sign that the property market is set to improve in 2024.
“For the moment there is still slight concern as more than 1.4 million mortgage holders are set to experience higher rates in 2024.
“For some, this could have profound consequences, meaning that it continues to be a buyers’ market for a short while longer.
“However, at the first sign of a base rate decrease, all bets are off.
“That may well prove to be the turning point and the end of the first-time buyers window of opportunity.”
Ranald Mitchell, director at Charwin Private Clients, added: “First-time buyers are in danger of missing a glaring window of opportunity to get themselves on the housing ladder.
“It remains a buyer’s market and will continue to be for a period in 2024.
“With mortgage rates tumbling, lower deposit schemes becoming more available and property prices arguably at the bottom, now is the time to get active in your property search.
“First-time buyers should get out of the inactive slumber of 2023 and act before market conditions move against them once again.”
Further reaction:
Riz Malik, founder and director at R3 Mortgages:
“Being a first-time buyer in 2023 has been like being an only child. In 2024, another comes along and they are going to have to share.
“If lower borrowing rates encourage more people to move next year, competition will increase.
“However, first-time buyers will always have a ‘premium’ given they are not in a chain and that goes a long way.”
Andrew Montlake, managing director at Coreco:
“The latest fall in inflation will bring some early Christmas cheer to policy makers and consumers alike.
“This will no doubt have an impact on swap rates, which in turn will allow mortgage lenders to continue to reduce their product offerings as the January mortgage sales look set to become even more intense.
“It also heaps further pressure on the Bank of England to cut the Bank base rate sooner rather than later as they are in danger of looking out of touch with what is happening in the real world, especially those that voted for another rise only a few days ago.
“This also has implications for the property market as a whole and we could see prospective buyers return to the market in earnest early next year before increasing demand starts to put pressure on house prices to start to increase once more, especially in popular areas, as 2024 proves to be a good year to buy.”
Paul Kermath, chief operating officer at Finanze Group:
“It’s unlikely that we will see rates cut sooner than Q2. What is needed is stability and a return of buyer confidence.
“We’ve seen a determination in our clients to continue to buy regardless of interest rates and economic challenges, but it’s required them to drive harder bargains and rely on a great deal of creative thinking.
“The old saying holds true: ‘Don’t wait to buy property; buy property and wait.’”
Matthew Jackson, director at Mint FS:
“The drop in inflation in November was more than expected and most welcome.
“It is now highly likely that the base rate will be reduced in either February or March, with the latter the most likely.
“The New Year bounce in property will be in full swing with agents returning full of optimism as well as turkey and this will see an upsurge in the property market which will be heightened by the base rate being reduced at the end of Q1.
“By April, it will shift to a sellers’ market again with property prices edging up.
“The real challenge is that this will not be supported by Land Registery completions so it is likely brokers will be fighting against down valuations in the short term.
“My advice to first-time buyers is to be active on Rightmove on Boxing Day, which is statistically the day of the year when most property is listed, and get out viewing early in 2024 to use the market to your advantage when offering.”
Justin Moy, managing director at EHF Mortgages:
“The window of opportunity for first-time buyers may become smaller, if prices start to hold a bit sooner and mortgage rates do fall quicker than expected.
“2024 may be ‘the’ year lenders will be doing their best to find ways of improving affordability, and I sense more borrowers will look towards longer-term deals to lock in rates as well.
“There is still plenty of things that could cause a ripple or two, for example, the oil price can easily add to inflation if we are not careful, but once we see inflation continue to fall for a few more months, everyone’s confidence will rise and house prices almost certainly with it.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“We’re far from the market swinging back in favour of sellers anytime soon.
“With 1.4 million mortgage deals due to renew in the next 12 months, there’s still a lot of pain to be felt by existing homeowners.
“With inflation falling, mortgage rates reducing, and the mortgage charter in place, don’t count your chickens.
“As such, first-time buyers still have a great chance in 2024 to take a step onto the ladder without the competition they’ve faced from landlords over the past decade, and they should heed these three pieces of advice.
“Firstly, remember the perfect is the enemy of the good. Secondly, don’t overestimate your knowledge of the mortgage and property market despite having spoken to Dave down the pub, who once bought a house for the price of a Freddo.
“Finally, stop stressing over mortgage rates. Just get a damn house bought while you have the chance. Here endeth the first lesson.”
Steven Hargreaves, mortgage and protection adviser at The Mortgage Co:
“We think what is needed is stability. It is probably too early to be talking about property prices increasing.
“We are expecting lenders to keep cutting their margins, as they need to sell mortgages, but expect the Bank of England to cut their rates in the spring.
“However, if we can see stability rather bust then boom again, that will be better for all.”
Michelle Lawson, director at Lawson Financial:
“It has been a buyers’ market for a while but sadly not conveyed enough!
“Those that have bought right now, particularly first-time buyers, are getting some good deals.
“The mortgage rates are coming down, more to follow especially with today’s inflation drop, so if people can afford to buy now, they will afford it more later.
“Buying is a small window of opportunity, and the chain starters really need to get out of the blocks early in January before the tide turns.”
Peter Stokes, director of mortgages at Davidson Deem:
“Whatever happens in 2024, the landscape for first-time buyers has changed probably for many years to come.
“Gone are the super low interest rates, up are the costs of living, and the alternative of renting seems to be getting more expensive by the month.
“Historically, first-time buyers tended to wait until they thought the market had bottomed out before purchasing, but the current availability and costs of renting means they are less likely to wait now.
“With inflation falling, and rates likely to fall further (but of course nowhere near 2021 levels), I feel this will result in more first-time buyers entering the market, provided of course, there is sufficient housing stock for them to buy.
“Of course, if housing stock is in short supply, this would then push prices back up again. 2024 is going to be an interesting year!”
Bob Singh, founder at Chess Mortgages:
“Following today’s inflation figures it’s reinforced my belief that first-time buyers are running out of runway!
“I have been saying that as soon as the base rates start to drop first time buyers will be playing catch up and the tables turn making it a sellers’ market again.
“It’s very difficult to time the market precisely and the next few months seem to be the bottom before we see the cuts in Q2.”
Jack Tutton, director at SJ Mortgages:
“Interest rates have been reducing for a while now and lenders are continuing to battle it out to get the lowest rates, there will come a point when they become low enough again to attract home movers back into the market.
“We haven’t seen the dramatic fall in house prices that many experts predicted, however when mortgage rates began with a five or six it put people off moving.
“Should they get to a point when they begin with a three, I think this will entice people to start looking into moving again especially if they planned to move in 2023.
“This will drive greater competition which could push first-time buyers out of the market, particularly if they are restricted by having a small deposit.”
Rita Kohli, managing director at The Mortgage Stop:
“Was there a window of opportunity for first-time buyers?
“There was no market crash in 2023 as some predicted, affordability tightened with lenders and monthly payments became eye watering.
“Yes, with inflation falling it puts pressure on the Bank of England to reduce rates and this will hopefully continue to entice more buyers and sellers back to the market but it’s still tough out there for first-time buyers and until we get more innovative ideas from the Government and lenders it’s only going to get harder to buy your first home.”
Jamie Thompson, mortgage broker at Jamie Thompson Mortgages:
“No, the window for first time buyers is not closing.
“If anything, the window is open wider than ever. In the last few years more and more lenders have become open to smaller and smaller deposits in more and more situations.
“More lenders have started to allow a 5% deposit on new build properties, more have begun to accept a 5% deposit on flats, and recently Skipton Building Society even started accepting 5% deposit on new build flats, compared to 20% needed with some of the big lenders.
“We also see criteria loosening up meaning more first-time buyers will qualify with more lenders and the lenders look to attract more customers for reasons other than having the lowest rate.
“For example Accord and Nationwide have recently improved their rules for foreign nationals.”
Charles Breen, founder and director at Montgomery Financial:
“House prices have to edge up again in the coming months, demand is still outstripping supply as we simply do not build enough houses for the number of people we need.
“The last 18 months are just a course correction in the property market, we still have historically low interest rates, the last 10 years were just a blip.
“FTB’s are in a brilliant position, they still can negotiate on their purchase price and if rates come down as expected either during the buying process they can make a further saving or when they will remortgage.
“Once rates reduce further it will open up the gates of Mordor and we will have a similar frenzy like we did post covid as everyone is waiting.”
Elliott Culley, director at Switch Mortgage Finance:
“Positive news always breathes new life into a market and the latest data will do just that.
“There’s a real momentum building right now and its likely we will see more first-time buyers entering the market.
“Whilst there is still a housing shortage it’s likely this will lead to house prices starting to tick upwards and we are starting to see the early signs of this already.”
Malcolm Davidson, director at UK Moneyman:
“The window of opportunity for first-time buyers is always open, but we are about to see the unleashing of pent-up demand in the market in the New Year.
“The stumbling block in the market in 2023 has been the reluctance of people who are already on the ladder to list their houses for sale due to the increase in mortgage rates.
“Some of these homeowners will realise once and for all over the festive period that their current property is indeed too small for their needs and we will see many more homes come onto the market in late January.
“The days of close-to-zero mortgage rates may now be gone, but as inflation nears its arbitrary 2% target, mortgage lenders will have the confidence to shave a few more points of their fixed rates and this could be the news buyers have been waiting for to spur them back into action.”
Ken James, director at Contractor Mortgage Services:
“Tis the season to be buying, especially when you’re starting to feel extra Santa-mental, all the good news emerging from reports such as base rate holding, inflation coming down and the rates as we know falling faster than a snow blizzard, it’s no surprise that first-time buyers may be getting a little more energetic about the prospect of buying in the New Year.
“If rates continue in the fashion they have, it could lead the way for the market in 2024 to start with a bang and the tide of doom and gloom may get washed away, at least for now.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:
“There are several unwavering truths that we need to remember; over time property prices will rise, interest rates will move up, and interest rates will move down.
“Very much like there is no “perfect time” to have children, there is no “perfect time” to buy a property.
“If you want to own your own home, have the deposit saved and are comfortable with the mortgage repayments then crack on – waiting is very often not going to produce the savings you may think, or are led to believe.”
Ross McMillan, owner and mortgage adviser at Blue Fish Mortgage Solutions:
“In 2023, first-time buyers were unquestionably the most active of any buyer type and driven by a combination of positive inflation data, continued reduction in mortgage rates, and relaxation of lending and affordability criteria, 2024 seems set to see further opportunities for those looking to take their first steps on the property ladder.
“Lower interest rates should make mortgages more affordable and higher budgets potentially achievable so even if property prices do edge up, first-time buyers will undoubtedly continue to be the fuel that sparks the overall market fire.”
Joe Garner, founder and managing director at Joe Garner Consulting:
“The window of opportunity isn’t closing because it wasn’t ever open!
“House prices have stalled at best, however, with a dangerously low supply and interest rates at 5% we will never see a first-time buyers’ market again.
“First time buyers will be defined solely by their ability to borrow a deposit from their family. Even a well-paid job is no longer a pathway to home ownership.”
Sophie Pollard, director at MyHaus Brighton:
“As we look towards Q1 there is a sense of optimism in the market, especially for sellers.
“For the latter part of 2023, there has been a power shift over to the buyers who have been able to bag themselves a good deal despite rates being high.
“First-time buyers are always in a good position, being chain-free, so there will always be opportunities. Let’s hope for stability and confidence back in the market for 2024.”
