Bank of England Money & Credit report June 2024: "The second half of 2024 could be a humdinger"

That mortgage approvals remained stable in June despite the General Election shows there is still life in the mortgage and property market. July has been far more positive. Demand is really starting to pick up, with borrowers either making their move with the view that rates will continue to reduce before they complete, or deferring completion as long as possible. I’m seeing many people remortgaging onto a two-year fixed rather than a five as the general consensus is that there is still going to be a bigger drop in mortgage rates than we are currently seeing. The second half of 2024 could be a humdinger as a huge amount of pent-up demand feeds through. If a base rate cut comes this week, brace for a lot of activity.

Buyer enquiries have been up markedly in June and July as confidence grows that the first base rate reduction is coming soon. Even the start of the school summer holidays has not tempered the interest of borrowers. With lenders already cutting rates weekly, the mortgage market is about to experience a heatwave. That mortgage approvals for house purchase remained stable despite the country going to the polls shows that people are getting on with their lives. All eyes now are on the Bank of England rate decision this week, which could really heat the market up if we get a cut.

Enquiries from first-time buyers and home movers are up, but new applications have remained the same in anticipation of that first cut from the Bank of England. The latter part of 2024 is expected to see a flurry of activity. Remortgage enquiries continue unabated and it seems that affordability is no longer as much of an issue as it was several months ago, which is a positive sign and will only improve as rates reduce. Fixed rates continue to be the preference at the moment, mainly because of the pricing structure of the available tracker products, but this is likely to change soon.

The UK’s insatiable appetite for homeownership is always there. While simmering on the back burner during the first half of this year, it’s shown itself to have as much strength and resilience as Adam Peaty’s breaststoke. With strong performances in June and July giving hopes of a place in the medals in the second half of the year, the likelihood of the mortgage market walking home with some metalwork can only be scuppered if the Monetary Policy Committee doesn't drop rates very soon. Will Rachel Reeves hold up the white flag indicating a foul due to the inherited £20 billion black hole in the public finances, or will the Labour party carry through the pledges made to the nation only weeks ago?

The General Election may well have stifled activity in June, and the figures would potentially have been stronger without it. However, there is now a much more positive air as consumer sentiment has really started to improve. A more stable Government, the prospect of an interest rate cut, and the belief that house prices will begin to rise again next year as pent-up demand for housing feeds into the market, have all contributed to a growing level of enquiries. Whilst it may finally be a hot, lethargic summer, lenders have not been resting on their sun loungers, and rate cuts have started to filter through with increasing regularity. With five-year fixes now available with a 3 at the front once again, the mortgage and housing markets are primed for take off in the latter half of the year.