The Bank of England has today announced its decision to hold the existing base rate. So, what does this mean for mortgage rates and the property market for the remainder of this year?

In a predicted move on 9 May, the Bank of England’s Monetary Policy Committee has voted to maintain the base rate at its current level of 5.25%. The rate has remained unchanged since August 2023 and is at a 16-year high.

When will it come down? Financial analysts were previously anticipating a reduction in the summer. However, those predictions were before the release of the latest inflation statistics, which indicated a slower than expected decrease in inflation, currently standing at 3.2%.

That said, the base rate is still expected to go down later this year. If this happens, mortgage rates should also go down.

Recent interest rate rises

Last week mortgage rates recently went up. A number of major banks chose to increase their rates. Yet, in comparison to last summer’s peak average of 6.4% on two-year fixed-rate deals, the current two-year average rate has eased slightly to around 5.4% (with some variation on these figures depending on loan-to-value).

Resilient property market

We’ve seen an uptick in property listings and viewings. According to Halifax, the market is being boosted by first-time buyers adapting their expectations and seeking smaller homes – which in turn is boosting the value of flats and terraced houses. This shift is narrowing the growth gap between smaller and bigger properties, with Halifax also noting a subtle 0.1% increase in house prices for April, compared to 0.9% in March. The lender says property prices grew by 1.1% annually compared to 0.4% the previous month.

Optimistic projections

With confidence returning to the housing market, both Halifax and Lloyds Bank project a gentle rise in property prices coupled with a softening of mortgage interest rates this year.

While there are no guarantees about the future, the outcome for the rest of 2024 should be more positive, barring any unforeseen significant global events.

Worried about remortgaging?

If you are due to remortgage this year and you are concerned about the prospect of paying a higher rate, seek advice from an experienced broker. You may be able to explore various ways in which you can mitigate the increase, such as increasing the term of your mortgage (depending on your age) or switching to an interest-only deal on a temporary basis. Seek advice sooner rather than later.

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