Mortgage rates have come down again, so does this mean that rates will continue to fall?

Earlier this week, it was announced that one of the major banks was offering lower than 4% mortgage deals, with more lenders expected to follow suit. It’s important to note that these are only available to borrowers who are borrowing 60% or less than the value of their property.

However, according to one financial publication, ‘a growing number’ of lenders are reducing mortgage rates for first-time buyers and those needing to remortgage.

Lower fixed-rate mortgage deals

These cuts aren’t the first reductions seen recently, despite challenging market conditions in the past year. Lenders reduced rates in December on fixed-rate products, so the market at the start of 2024 is already more competitive than in the summer and autumn of 2023. So, are these latest rate cuts significant?

‘It’s certainly a good way to start the new year,’ says MB Associates’ Managing Director, Monica Bradley. ‘It’s hard to predict who will follow suit and whether the continual tit-for-tat reductions in fixed rates we saw in the latter part of 2023 will continue.’

Monica is keen to stress that anyone needing to remortgage should act now and not wait for further reductions. ‘Borrowers tempted to hold off committing to a product in the hope that these rate reductions will continue might come unstuck if the pricing reverses,’ she says.

‘We saw a similar trickling down of rates throughout the second quarter of last year, only for the cost of fixed-rate pricing to jump upwards again on the back of some less-than-ideal inflation figures and continuing hiking of the base rate by the Bank of England,’ adds Monica. ‘It seems much more likely that the Bank will hold the base rate for a little while now, but fixed-rate pricing is very sensitive to wider financial markets, and lenders are currently working with tiny margins.

Advice on remortgaging

What if you’re due to remortgage soon? Monica says: ‘I’d advise borrowers due to remortgage to commit to a product and secure it, but know that they should be able to review this if pricing continues to come down. A good mortgage broker will keep an eye on this for you.’

The Bank of England hasn’t increased the base rate since August and is under increasing pressure to reduce it, especially now that inflation has dropped. We can’t say when this will happen, but some analysts predict the base rate will go down in the summer.

Speak to a mortgage broker

So, what should you do if you had already secured a remortgage deal before this latest rate drop news? ‘If you’ve already secured a remortgage rate, keep in touch with your broker, as it might be possible to seek a lower rate with the same lender or elsewhere,’ says Monica. ‘If you have dealt directly with a bank, get in touch with a broker, show them the rate you have secured and challenge them to find something better.’

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