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Will Mortgage Rates Come Down in 2024?

2023 saw a huge hike in mortgage rates, largely due to the Bank of England increasing the base interest rate to 5.25%.

According to Zoopla, fixed mortgage rates peaked at 6.44% which was a stark contrast to the historic lows.

But will mortgage rates continue to rise in 2024 or will they begin to drop?

The good news is that mortgage rates are already starting to come down. News reports in early January 2024 suggest that mortgage lenders are already cutting rates.

One of the biggest UK lenders, Halifax, has cut their mortgage interest rates by close to one percentage point and mortgage brokers are expecting other lenders to now follow suit.

It is important to note however that not all mortgage products will be reduced, so it’s wise to speak to a mortgage broker to understand which ones have now become more affordable for you.

How mortgage rates are dropping at the start of 2024

Towards the end of 2023, you’d be lucky to get a mortgage rate below 5%. Since January 2024, 5 year fixed rate deals are now being offered at below 4%. However, this rate is only available currently for a remortgage with a 60% loan-to-value.

Media outlets are reporting that a 2 year fixed deal should soon fall below 4.5%.

As we continue to move through the year, Benwell Daykin expect these below 5% rates will move to other mortgage products too, as well as other lenders.

What does this mean for the housing market?

When rates decrease, buyers tend to have better affordability. This means they can look to make offers on properties which they previously may not have been able to afford.

As such, we expect house prices to remain at their current levels, if not increase slightly.

Houses should begin to sell faster too, as increased affordability means more people will be looking to purchase property.

Key things to remember as mortgage rates drop

Remember to always speak to a mortgage broker before making a decision on which mortgage product to go for. Benwell Daykin offers free initial mortgage advice which can help you to decide which product is best for you based on your own circumstances.

Fixed rates are a great way to lock in lower interest rates but be aware these rates could go down further. If you lock in for a long period of time then you will be missing out on these further drops. Of course, rates could rise too which would obviously act in your favour!

Remember also to look out for fees. Some lenders offer lower rates but include a fee when signing up for the mortgage.

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