Mortgage and Bad Credit Mortgage Outlook 2024

Here is the latest outlook from Adverse.Online to shed some light on the current housing, mortgage and  bad credit mortgage  markets and what we might expect for Q1 of 2024. 

2023 was a challenging year for the housing and mortgage markets and with the continued cost of living crisis the pressure on households has been intense.

Interest Rates - Maintained

The Bank of England’s Monetary Policy Committee (MPC) has been increasing rates in response to high inflation from the start of 2022 and the last rate change was August 2023 at which the current interest rate of 5.25% was  introduced.

Despite favourable downward trends to high inflation, the  Bank of England’s Monetary Policy Committee are reluctant to cut the headline rate of interest too soon, for fears that inflation may creep up again. 

The  MPC meet again on  February 1st and 21st March with many economists split over whether the rates will hold, or if the Bank of England will drop the rate to 5%.

There are some reports in the financial news that some lenders such as HSBC and Santander will drop their 5 year fixed mortgages to 4%, well below the base rate, in anticipation of future base rate drops. 

In its recent Financial Stability Report, published on 6 December, the Bank of England said around 900,000 borrowers are set to see their monthly mortgage repayments jump by more than £500 this year, with some 20% of these homeowners seeing a monthly increase of more than £1,000.  This is because they fixed their rate at around 2% two years ago and are now facing rates of around 5% when they move onto a fresh deal when their current one expires.

With yet more squeezes to household finances in the short term many will be hoping for hopeful signals from the Bank of England that the worst is over.

House Prices - Holding

Average property prices have fallen by a relatively modest 1% to 2% over the past year, according to the leading house price indices.  Rising mortgage rates have acted to dampen demand, with the market seeing falling prices and properties taking longer to sell.

Robert Gardner, Nationwide’s chief economist, says: “It appears likely that a combination of solid income growth, together with modestly lower house prices and mortgage rates, will gradually improve affordability over time, with housing market activity remaining fairly subdued in the interim. “If the economy remains sluggish and mortgage rates moderate only gradually, as we expect, house prices are likely to record another small decline or remain broadly flat – perhaps 0 to minus 2% – over the course of 2024.”

Mortgage Market Outlook for 2024

The outlook for 2024 is one of continuing challenges in the mortgage market; however, the main pressures on affordability look to be peaking now. and whilst it will take some time for the pressure on household finances to recede, many expect things to begin to look up by the end of 2024 and into 2025.

The 2023 mortgage market figures are sobering. Gross lending was down 28%, lending for house purchase was down 23%, remortgaging was down 21%, new Buy to Let was down 53% and the only increasing metrics were for arrears levels and repossessions which increased by 30% and 13% respectively.

UK Finance are predicting that gross lending will fall again in 2024 by some 5% with lending for house purchase falling again by some 8%.

James Tatch, Head of Analytics at UK Finance, said: "2023 was a challenging year for both prospective and existing mortgage borrowers, facing affordability pressures from higher interest rates and the increased cost-of-living, as well as house prices still at elevated levels relative to income. In the face of these challenges, borrowing for house purchase has been constrained. At the same time most existing customers looking to refinance their loans chose to take a Product Transfer with their current lender, where affordability tests are not required. With these pressures unlikely to ease significantly in the short term, we expect lending to remain weak in 2024, with a gradual improvement in affordability reflected in a modest increase in activity levels in 2025."

Indicative Rates for a Bad Credit Mortgage

From our panel of bad credit mortgage lenders, we have largely seen interest rates holding into 2024 but with some simplification of products and lending criteria. 

With the market for bad credit mortgages broadly keeping track with changes in rates from the high street lenders, the rates available for bad credit mortgages are still within 1.5% of their high street equivalents.

From our panel of bad credit mortgage lenders, we have seen the following products:  

Rates from 6.34% with up to with 75% Loan To Valuation* 


Rates from 6.95%  with up to with 85% Loan To Valuation *

*Interest rates available as at January 4th 2024 are subject to change, or withdrawal at the lenders discretion. The actual rate available will depend upon your circumstances. Ask for a personalised illustration.

Adverse Online is a fully online bad credit mortgage broker offering the convenience and speed of online mortgage application completion and processing but with the quality assurances you would expect from a mortgage broker authorised and regulated by the Financial Conduct Authority.  

Whether you want to apply for a Bad Credit First Time Buyer Mortgage , Bad Credit Home Mover Mortgage or a Bad Credit Remortgage , we have a range of adverse credit mortgage products for you and an initial decision in principle can be achieved in less than 15minutes.

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