This will be the third time in a row that the Bank of England has held the base rate at 5.25%, which remains at the highest level in 15 years. This flatline is intended to keep lowering inflation, as the higher interest rates are, the more people’s spending power reduces. In the minutes from the Bank’s rate-setters meeting, it said rates would need to stay higher “for sufficiently long” to return inflation to 2%.
The past 2 years have seen mortgage rates spiral but this recent plateau is bringing with it caution and a note that a drop in interest rates is not on the horizon yet. So, let’s take a further look into what this means for mortgage rates in 2024.
What Does This Mean for Your Mortgage in 2024?
It is not clear yet whether inflation has peaked, and central bank governor Andrew Bailey said, “It is too soon to start thinking about cutting interest rates”. So, what does this mean for mortgages in 2024?
For those on variable and tracker mortgages, there will be no change to their monthly repayments, the change will come to those on fixed rates whose deals are coming to an end as providers will already be tinkering with their remortgage rates and preparing to compete. The money market’s expectations of the base rate are already priced into mortgages and last week, the average 2-year fixed rate deal fell below 6%, heading toward to 4.5%.
Even though the number hasn’t decreased, the recent downward movements in the mortgage market could be luring buyers back in. There has also been mention of a predicted 4 rate cuts set to happen in 2024, which again, should see lenders cutting rates in order to compete.
What to do if you're on a Fixed Rate.
As previously mentioned, some lenders have already started to reduce their fixed rates, pre-empting the upcoming cuts from January. As most mortgage holders in the UK are on a fixed rate, what you should do when your term ends will depend entirely on the following:
- Locking in – if your current deal is ending in the next 6 months it could be wise to lock in a fixed deal now to give you insurance against any further rate rises. This option also allows you to switch to a cheaper deal if one launches before your current rate finishes.
- Trackers – if your current deal is ending soon you may want to consider a tracker, even if temporarily. You could get a tracker that doesn’t come with early repayment charges, then if rates come down, you can move onto a fixed deal, penalty-free at your time of choosing. A side note to trackers is that, even though the base rate is not expected to rise above 5.75%, there are no guarantees and as trackers follow the base rate, you will have to pay the extra if the rate rises.
- Lenders Standard Variable – with an SVR, the interest you pay can change at any time, which means that they are far more expensive right now due to the continuous rise of the base rate. Switching to a fixed deal can provide price certainty, however, if you are waiting for fixed rates to drop, you could opt for an SVR in the meantime without an early repayment charge, and switch to a better fixed-rate deal later.
Speak to your Trusted Mortgage Advisor in Manchester.
If you’re feeling confused or want more information on how this plateau of the base rate could impact you and your mortgage prospects, speaking to our friendly team at TaylorMade, a specialist mortgage broker in Manchester, could be the perfect solution.
TaylorMade is a dedicated, professional, and independent mortgage advisor in Manchester, with access to the best mortgage rates on the market today. We understand the financial difficulties facing everyone right now, and our friendly, helpful advice could be just the solution you need. It can be overwhelming trying to make the right decision on your own, searching for the best deal for you and your family, this is where TaylorMade can help.
Contact us today, TaylorMade, your expert mortgage broker in Manchester.
