With mortgage interest rates at an all-time high in 2023, this year offers a brighter outlook. Drew Somerston, Private Client Director, offers his views on the current market and what we can expect over the next few months.
HNW mortgages in Q1 2024
Q1 2024 shows significant light at the end of the tunnel following a drop in interest rates in recent months. Mortgage rates now sit at their lowest since their recent peaks in November 2022 & July 2023 having dropped by c.1.5%, from highs of 6% to 4.5% across the board. The rate reductions have had a major impact on the market with previously subdued purchase demand being reignited with many buyers back on the hunt.
Prime property buying
With interest rates decreasing, ‘prime’ property continues to retain its value and the new year buyer rush appears to have sparked bidding wars last seen in the prime space prior to the rate hikes. This is not only positive for sellers, but also for investors looking to make long term investments in robust bricks and mortar. Prime central London remains the buying hotspot for HNWIs, yet over the past 6 months the demand from prime locations outside of London has declined. Higher debt costs have largely contributed to this change but with further rate reductions anticipated through the year, we expect to see outer London demand pick up again in 2024.
In addition to reducing interest rates, high street lenders have been applying a more ‘common-sense’ approach to larger loans (£1,000,000+) and HNWs. New direct-to-underwriter pilot schemes with many lenders have allowed us to explain why the lender should consider the applicants. With this, LDN Finance – and our sister brand LDN Private Clients – can create bespoke propositions that would otherwise have fallen at the first hurdle due to regimented criteria. As such, we have helped many clients save significant interest and fees by using the high street where it would previously have been private bank or bust.
Importantly, our relationships with the lenders and the underwriters directly now means we can move to offer extremely quickly, something that has been more and more critical with sellers and agents more nervous about mortgaged buyers than ever before.
It’s unsurprising to see self-employed clients continue to approach us for our help. Their irregular income and asset structure can cause complexities when applying for property finance, especially when looking for larger mortgages. However, having a highly experienced team with a keen eye sees us deliver time after time. We are proud to offer this specialist service and would be happy to discuss it further should help be required.