What’s happening with UK Mortgage Rates?

In the last few months, the landscape for mortgage rates in the UK has been marked by fluctuation and anticipation. We saw a wave of rate reduction across the market over the latter part of 2023 and in January.

These rate reductions were driven by a rise in expectations for an early interest rate cut by the Bank of England. However, the subsequent freezing of interest rates by the bank has led to a more cautious approach amongst lenders, impacting both fixed and variable-rate mortgage pricing.

The average 2-year fixed rate currently stands at 5.58% and 5-year at 5.22%, we have seen some lenders reduce five-year deals below 4%. However, the unexpected rise in inflation to 4.0% has cast some doubt on the likelihood of a base rate cut soon, affecting funding costs for mortgage lenders as swap rates increased over recent weeks. This has led to some lenders starting to announce rate increases.

Lenders have started to focus more recently on reducing their rates for first-time buyers and home movers with larger deposits. Whilst remortgage customers are facing slightly increased rates from those offered earlier in the year.

Whilst the recent rate cuts offered relief for mortgage holders, experts have cautioned that this does not necessarily signal a sustained trend towards lower rates. For those considering fixing their mortgage, now may be an opportune moment.

The average standard variable rate is 8.17%, with fixed rates available from 3.88%. If you are on a variable rate, now would be a good time to review your options. If you are contemplating that the base rate is still going to fall, then a low or no fee tracker mortgage could trim the rate payable down by potentially 2.5%.

The buy-to-let sector has also seen rate reductions, which will hopefully lead to fewer landlords selling their properties.

Many households will come off a fixed rate within 2024, with the majority facing significant increases in mortgage costs. With pricing uncertainty, it is recommended that you review and lock in a deal.

As a mortgage broker, MMPE continues to monitor mortgage rates that have been applied for. This includes both remortgage and purchase mortgage applications, so if a better option becomes available before completion, we assist in switching the deal to the cheaper option.

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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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