For 2024, there is an expectation that mortgage rates might decrease, though this may occur more slowly than initially anticipated. As of May 2024, fixed-rate mortgages have seen a rise following a period of decline.

Despite recent increases, there could be promising developments for homeowners. On May 9, 2024, the Bank of England decided to maintain the base rate at 5.25%, marking the sixth consecutive hold. Significantly, two out of nine members of its Monetary Policy Committee supported a reduction of 0.25% in interest rates, an increase from one member previously. This shift is viewed by experts as a potential sign of lower interest rates.

However, the future of mortgage rates remains uncertain and will be influenced by various factors.

Predicted timing for mortgage rate reductions market projections suggest the first reduction in interest rates might occur between June and August 2024. Generally, mortgage rates tend to follow the trajectory of interest rates.

Nonetheless, any reductions will depend on other variables, such as inflation trends. Although inflation has decreased over the past year, it stood at 3.2% in May 2024, still above the Bank of England’s 2% target.

Mortgage rates are notably higher than in recent years. For example, the average two-year fixed rate was 4.74% in May 2024, a drop from its peak of 6.86% in July 2023 but considerably higher than the 2.34% in December 2021. To find competitive rates, it is crucial to compare options and seek professional, fee-free advice.

Recent mortgage rate increases recent weeks have seen mortgage rate hikes from major lenders such as Santander, NatWest, and Nationwide.

Why are UK mortgage rates fluctuating? UK mortgage rates surged in 2022 following base rate increases by the Bank of England to counteract rising inflation. Rates escalated further after economic policies were introduced by former Prime Minister Liz Truss in September 2022.

Rates began to decrease as inflation fell and the market anticipated a peak in base rates, predicting a decline in 2024. Additionally, early 2024 saw intensified competition amongst mortgage providers, offering better rates to borrowers.

However, from February to May 2024, lenders began increasing rates on fixed mortgages in response to slower and fewer anticipated rate cuts.

Current UK Mortgage Rates as of May 1, 2024 According to Rightmove:

  • Average two-year fixed mortgage rate at 60% LTV: 4.88%
  • Average five-year fixed mortgage rate at 60% LTV: 4.50%
  • Standard variable rate (SVR): 8.18%

Is 2024 a Good Year to Remortgage? The decision to remortgage in 2024 depends on individual circumstances. With approximately 1.5 million fixed-rate mortgage deals ending in 2024 and rising SVR rates, remortgaging could potentially offer significant savings.

In 2025 the market anticipates a gradual improvement in household financial pressures, potentially leading to more favourable mortgage rates.

First-time buyers should focus on budgeting, improving credit scores, and maximizing their deposits to secure the best possible mortgage rates despite the forecasted fluctuations.