Fixed vs Tracked Mortgages

Navigating the Mortgage market in 2024: to fix or to track?

In this short blog, we look at the 2024 UK mortgage market, with some insight into whether it is better to fix your rate or possibly to track. Homeowners and prospective buyers will naturally be contemplating what is going to happen with mortgage rates this year. The housing market is a dynamic landscape, which is influenced by an array of economic factors. Understanding what is likely to happen is crucial, especially for households where rates are set to expire in the coming months.

The current landscape looks stable, however there are influences. January has seen the mortgage market remain relatively stable, with the general trajectory being a decrease in rates, with lenders competing for market share. The Bank of England has maintained the base rate, which has fostered an environment of lower interest rates. However, predicting the future trajectory is like navigating a ship through unpredictable waters. There are several factors, such as inflation, economic growth, and global events that can quickly sway interest rates.

There is renewed confidence, however as we have seen over recent years with the likes of, the financial impact of the Covid pandemic and Russia’s invasion of Ukraine. World events can impact quickly, and we cannot always predict with certainty what is going to happen.

Many commentators are predicting that the UK will see a drop in the bank base rate as early as May, whilst others are being more cautious and are suggesting possibly the base rate may drop in August.

Couple House Buying

Fixed-rate mortgages: certainty in uncertain times

If you are approaching the end of a fixed-rate mortgage within the next 6 to 12 months, or contemplating buying your new home. The question arises, to fix or not to fix? Opting for a fixed-rate mortgage provides a certain level of financial stability. With a fixed rate, you can lock in your rate at a specific interest rate for an agreed period. The benefit is certainty of payment for the fixed rate period and being shielded from the volatility of any future rate increases. The downside, if rates drop even further, you are potentially paying more than the current deals available.

Therefore, the advantage of fixed-rate mortgages lies in predictability. Regardless of market fluctuations, your mortgage payments will remain constant. This can be particularly advantageous in times of economic uncertainty, if interest rates are on the rise, or you prefer to know exactly what you are paying and can budget.

Tracker rate mortgages: Riding the waves of change

On the flip side, tracker rate mortgages offer a different strategy. This type of mortgage is tied to the Bank of England base rate, meaning that as the base rate fluctuates, so does your tracker rate. Meaning, that if the base rate rises by not .25%, then the following month the tracker rate mortgage would have increased by 0.25%, meaning an increase in monthly payment. Equally, this works in reverse, and if the base rate is on a downward trajectory, this means that your mortgage payments will follow suit.

Choosing a tracker rate mortgage requires a degree of comfort with uncertainty. Whilst you may benefit from lower rates if the base rate remains stable or decreases, there is the inherent risk that it may impact and increase your monthly mortgage payments.

Couple House Buying

The Crystal Ball conundrum

Predicting the exact trajectory of mortgage rates is an extremely challenging feat. Economic conditions can shift, and global events can send ripples through financial markets. Financial experts will generally advise homeowners to assess their risk tolerance and financial goals when making decisions. A consideration is how tight is your household budget. If your budget is relatively tight, you may be better off fixing your mortgage and giving yourself certainty and peace of mind. On the other hand, if you have more flexibility in your budgets, then a tracker rate could be of benefit, especially if the commentators are right and the bank base rate starts to drop.

Seeking professional guidance

Whether you lean towards fixing or tracking, seeking professional advice is important. MMPE as a broker can provide you with insights tailored to your specific situation, helping you with making informed decisions aligned with your financial objectives and circumstances.

In conclusion, the UK mortgage market in 2024 is characterised by stability, but the future remains uncertain. Homeowners with rates coming to an end, and home buyers need to weigh up the pros and cons of fixing or potentially using tracker rates or variables. Consideration being given to, risk tolerance, household budgets and financial goals.

Professional advice is a valuable compass in navigating uncertain waters within the mortgage landscape.

If you would like to discuss your mortgage options with on of our independant advisors, please use the link below to schedule a convenient time for you.

Schedule a Mortgage Appointment

My Mortgage Experts & Protection Experts Ltd (FCA 937076), is an Appointed Representative of King Mortgages Ltd.

King Mortgages is authorised & regulated by the Financial Conduct Authority (FCA). King Mortgages Ltd is entered on the financial services register http://register.fca.org.uk/ under reference number 803561.

The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.

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      Automatic Property Value Updates

      Changes in property value, coupled with a potential reduction in your loan amount (with a repayment mortgage), mean a change in the equity available in your property (Loan to Value); hence there could be improved opportunities for a better mortgage for you.

      Product Expiry Date

      Sussed will track when your mortgage is due to expire (usually when your mortgage payments rise substantially as you will automatically transfer to your lender’s standard rate).

      The app will alert you when it’s the right time to discuss your options with your mortgage broker.

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      This feature is ideal for today’s economy and increasing prices. Sussed will continually scan the market, looking for the best-fixed rates available, especially when interest rates are rising.

      Using a series of algorithms, our clever technology can identify longer-term fixed rates available today that could save money against predicted rates at the end of your current product term (including the cost of transfer) – sussed is doing all the hard work.

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      With automatic property value updates and your Mortgage information loaded, this feature calculates the amount of equity and the maximum potential loan that may be available within a landlord’s portfolio. This will assist with seeing if there is the opportunity for to perhaps buy another property from leveraging your portfolio.

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      Sussed can help you manage your portfolio.

      Early Review

      This feature is there waiting for interest rates when they reduce. Using the same technology as Rate Riser, sussed will identify if your current deal is now able to be improved.

      Should the interest rates decrease, sussed will compare deals available on the day with your existing deal and flag if there is an opportunity for you to save money by switching.

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      • East - £407,400
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      • London - £600,000
      • North East - £186,100
      • North West - £224,400
      • South East - £437,000
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