Mortgages, savings, energy bills: what’s in store for your money in 2024?

There are big considerations for all of us if we want to get the best out of our money in 2024.

A new year means a fresh start and, for many of us, that will mean a greater focus on our money.

After all the last couple of years have been pretty testing for the finances of many of us, so it makes sense to think carefully about what may lay ahead.

We’ve highlighted some of the big money questions you may face this year, as well as what you need to bear in mind to make the right decisions.

What’s in store for mortgages in 2024?

The last year was a torrid one for mortgage borrowers.

Hikes to Bank Base Rate fed into higher borrowing costs for the many who needed to remortgage, or who were brave enough to go through with a purchase.

That situation is changing though.

With Base Rate increases having seemingly peaked, mortgage lenders are getting increasingly competitive; the new year has started with a succession of lenders announcing significant rate cuts.

Halifax for example has sliced the cost of its deals by almost a whole percentage point, with the likes of HSBC and First Direct following suit with sizeable reductions of their own.

Base Rate is expected to drop on at least a couple of occasions this year, which is likely to translate into ever cheaper mortgage deals, though they are unlikely to hit the levels that have been the norm in recent years.

That prospect of rate reductions is only going to increase the appeal of short-term fixed-rate mortgages ‒ you get the certainty over monthly repayments, but with the potential to move to an even cheaper deal when it’s time to remortgage.

Similarly, some may prefer to go even further by opting for a variable mortgage, given your repayments are more likely to reduce over time than go up.

What’s in store for savings in 2024?

While those Base Rate cuts will be welcome for mortgage borrowers, it’s a different story for savers.

After years of dreadful interest rates on savings accounts, those Base Rate increases have resulted in much more attractive deals on offer for savers of late.

However, providers are already stripping back what’s on offer ‒ in December Moneyfacts reported that the cuts to the rates on fixed-rate savings deals were the largest seen in a decade.

Now, they are still far better than savers may have been used to in recent years, and with inflation having dropped it is easier to secure an inflation-beating return now.

But with rates only likely to be reduced further in the months ahead, savers will need to move quickly if they want to get the best possible return on their savings.

Counter to the situation with mortgages, the strong expectation that rates will drop from here is going to add to the appeal of longer-range savings deals.

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What’s in store for energy bills in 2024?

It’s not been a brilliant start to the new year when it comes to energy bills. The energy price cap increased on 1 January, meaning that a household with typical energy use will pay around £1,928, up by 5% on the previous price cap.

It does appear that better times lie ahead though.

Forecasts from Cornwall Insight suggest that the price cap will drop to £1,660 in the second quarter of the year, and then to £1,590 for the third quarter, before finishing 2024 at around £1,639.

That is good news for most of us, given so many households are on tariffs covered by the price cap. What’s even more encouraging is the slow reemergence of fixed-rate tariffs.

In many cases, these are limited solely to existing customers, but as the energy market hopefully continues to settle it may be that households have a greater range of options open to them this year.

What’s in store for house prices in 2024?

House prices bore the brunt of the increases to mortgage interest rates last year.

Unsurprisingly, plenty of would-be buyers put their plans on hold, and this drop in demand from buyers translated into lower activity levels and a drop in average house prices.

Nationwide Building Society reckons house prices dropped around 1.8% over the course of 2023, while forecasts from many within the industry are for prices to continue to drop this year.

Zoopla recently found that vendors are accepting an average of £18,000 off the asking price just to get sales over the line.

This could encourage those who have put off deals to instead push ahead.

The combination of lower borrowing costs and a more attractive asking price may mean that this presents an opportunity to land a decent deal on the right property.

That said, it may be equally enticing to hold off a little longer in the hope that prices fall still further, and mortgage rates become even cheaper.