Is now a good time to buy a house?

Fluctuating mortgage rates and mixed messages on UK house prices makes deciding if 2024 is the ideal time to buy a home challenging.

Ultimately, it depends on your personal and financial circumstances and what’s right for you. But to help you out, we’ve looked at the latest mortgage deals and house price data to provide a guide on what you need to consider before buying a new property.

Should I wait for mortgage rates to fall before buying?

Mortgage rates have changed significantly over the past few years. According to Mojo Mortgages, the average fixed mortgage rate currently stands at 5.1%*, much higher than the 1-2% deals that were commonplace a few years ago. 

If you’re currently on a low interest rate but thinking about buying a new home, you should be prepared for the possibility of much higher repayments when moving to a new mortgage deal.

A £200,000 mortgage with a 25 year term and 5.2% interest rate costs £1,181 per month. This is £333 more expensive than the same loan with a 2% rate, amounting to £3,996 more per year.

Are rates likely to fall?

For those looking to buy, you might be wondering if you’re better to wait for mortgage rates to fall before buying. But rates have been very changeable over the last 2 years, so a decrease isn’t guaranteed.

The Bank of England base rate has remained stable since August, but rates have continued to change, falling towards the end of 2023 and start of 2024. With some lenders even releasing deals with rates below 4%.

But some lenders have now started increasing rates on selected mortgage products again, with increases announced throughout February, March and April. There have been some further increases by certain banks and building societies since the date of the general election was confirmed, with swap rates also increasing slightly.

The table below shows the average fixed rate over the past year, and how it’s changed alongside the base rate.

With reports of inflation falling, there are some expectations that the Bank of England may look to reduce the base rate in the next few months, which could have an impact on mortgage deals.

But this is impossible to predict with real certainty, especially with how changeable rates have been in recent months.

If you choose to wait for rates to fall, be prepared that you might be waiting a long time, and you may even experience higher rates if they increase.

But if you choose to get a mortgage now, make sure you speak to an expert broker who can advise you on the best deal for your circumstances.

Should I wait for house prices to fall before buying?

Another key factor in deciding whether to buy a property is whether house prices are rising or falling. If they’re falling, sometimes you may be able to secure a property for less than you initially expected.

Of course, if they’re rising, you might find you have to pay extra to get the home you really want.

But if house prices are falling, or about to fall, you also have to consider the risk of negative equity. This is when you owe more on your mortgage than it’s actually worth which can make remortgaging or selling a bit harder in the future.

There have been mixed reports on house prices in the UK over the last few years, so it can be hard to be sure of what’s happening.

But generally, as mortgage rates rose, banks and property companies indicated that house price growth was slowing, and there was evidence of declines in certain areas.

Some banks also reported small increases at the start of 2024, showing that, just like mortgage rates, house price trends are hard to predict. This means that if you wait for them to fall, you could be waiting a while and possibly miss out on the property you want.

What is the current average house price in the UK?

Zoopla reported the average house price in March 2024 as £264,300**, which was 0.1%** lower compared to last year. This decrease was most pronounced in flats, which saw a 0.6% fall year-on-year**.

But, while parts of southern England tended so see decreases, the rest of the UK generally shows modest property price increases year-on-year**.

This shows the importance of looking at what’s happening in your local property market to decide whether it’s the right time for you to buy. Average house prices can change lots depending on the area and property type, so looking at the average for the UK might not be that helpful.

Keep an eye on local selling prices for the properties you’re interested in to help you make your decision. And make sure you have a strict property budget in place to keep you focused on the ones you can definitely afford.

Zoopla also reported growing seller confidence, evidenced by the greatest number of homes for sale in 8 years. Which means there may be more choice of property on the market than usual.

How to get the best mortgage deal for your new property

If you decide to go for it and buy a property this year, there are some things you can do to improve your chances of getting the best mortgage deal for it. 

1. Put down a larger deposit if you can 

When saving for a house deposit, the more you put down, the lower the loan-to-value ratio on your mortgage which usually means you get access to lower rates. Those with 40% deposits tend to be able to access the lowest rates, but even a 25% deposit normally gives you better options than a 10% one.

But it’s still worth keeping some money back for emergencies, so it’s wise not to stretch your budget too much on the deposit.

2. Choose the right mortgage deal for you

When it comes to mortgages, there are different options to choose from and it’s important to try and get one that works best for you. 

For example, you have to choose between a fixed-rate mortgage and variable-rate mortgage. Fixed deals have the same interest rate for a set period of time, while variable rates are subject to change. While fixed deals offer stability of payments, variable deals mean that you tend to benefit if interest rates do fall. 

You may also have to choose how long you want your deal to be, for example 2 years or 5 years (although there are lengths to choose from as well). And there are lots of other aspects to consider, including overpayment amounts and fees. 

All these decisions can be overwhelming so it’s often worth talking through your options with an expert, which brings us to…

3. Use a mortgage broker 

A whole-of-market mortgage broker can look at deals from across lots of lenders to find the ones suited to you. They can also explain all the costs involved and recommend deals best suited to you based on your circumstances.

This reduces your risk of applying for a deal that doesn’t work for you and getting rejected which can impact your credit score. 

And even if you’re not ready to buy a new property, but are planning to stay put and need a new mortgage for your existing home, the above tips still apply. 

What our mortgage expert says:

“Whether 2024 is the right time for you to buy a new property depends on your personal and financial circumstances. If you do decide to purchase a new home, mortgage deals and rates continue to change fast so make sure you use an expert broker who can recommend the best deals, and submit the application for you. They can keep you right about what documents are required, which might help to reduce any potential delays in the process.”

Claire Flynn Mortgage expert

*Average mortgage rates based on Mojo Mortgages data and accurate as of 7 June 2024

**House price data based on Zoopla's House Price Index