In the latest update from the Bank of England, the Bank Rate has been kept steady at 5.25% since its hike to a 15-year high last August.
While financial markets and consumers are cautiously optimistic that interest rates may have plateaued for now, the big question remains: What's in store for Bank Rate and mortgage rates in 2024? And how might this impact house prices?
Mortgage Renewal Shocks
As it stands, mortgage rates remain elevated compared to recent history, setting the stage for potential payment shocks for many borrowers when they come to remortgage in 2024.
According to the Bank of England's recent Financial Stability Report, around 900,000 borrowers could see their monthly mortgage repayments increase by over £500 this year as they transition from lower fixed-rate deals to higher rates upon renewal. Around 20% of these homeowners might even face monthly increases exceeding £1,000.
Find A Mortgage Deal
But fret not! Despite the higher mortgage rates, there are actionable steps you can take to secure a competitive home loan deal:
- Use a mortgage broker: Our partner Better.co.uk can help you navigate the market and find the best deals tailored to your needs.
- Start early: Begin exploring new deals up to six months before your existing mortgage expires to lock in competitive rates.
- Boost your credit score: Strengthen your credit profile to qualify for better rates.
- Save up: Accumulate a larger deposit to access lower mortgage rates.
- Consider different terms: Longer fixed-rate terms may offer lower rates, but watch out for arrangement fees.
- Explore product transfer deals: Compare your existing lender's offers with prevailing market rates to find potential savings.
What's Next For Mortgage Rates?
But what exactly influences mortgage rates? A myriad of factors, including economic conditions, central bank actions, inflation, and demand for mortgages, play a role in determining rates. Additionally, your lender, credit score, and financial position also impact the rate you're offered.
Looking ahead, predicting mortgage rates for the next five years is no easy feat. While experts anticipate a gradual decline in rates, the timing of this downward trend remains uncertain. However, market forecasts suggest that mortgage holders may soon become accustomed to fixed rates starting below 4%, offering a glimmer of hope for prospective homeowners.
Exciting times lie ahead in the mortgage market, and we're here to help you navigate every step of the way. Stay tuned for more updates and tips to secure the best mortgage deal for your dream home!
