Overview of Mortgage Rates in the UK in 2024 and beyond

Ed Wilkinson -

Mortgage rates in the UK have been on a rising trend since the end of 2022, following a period of historically low rates in the aftermath of the COVID-19 pandemic and exascerbated by the war in Ukraine and its knock on effects globally. The Bank of England (BoE) has been increasing the base rate of interest in an effort to combat inflation, which has led to lenders raising their mortgage rates. In the last few months the BoE has finally felt confident to begin the process of reducing the base interest rate. This is expected to continue over the next year or more although the speed of reduction is unclear.

Current Mortgage Rates

As of September 3rd 2024, the average two-year fixed-rate mortgage rate (with 15% deposit) is around 5.15% (down around half a percent on 12 months ago).

Outlook for Mortgage Rates

With core inflation proving stubborn, wages continuing to rise, and geopolitical uncertainty persisting, the Bank of England interest rate is expected to continue cutting interest rates but at a more cautious rate than previously predicted. A range of Forecasters are now predicting a base rate of 4.75% at the end of Q4 2024, then 4.35% for Q4 2025, and 3.95% by Q4 2026

Factors Affecting Mortgage Rates

Several factors can affect mortgage rates, including:

Tips for Homebuyers

If you are considering buying a home, it is important to shop around for the best mortgage rate. You should also consider getting pre-approved for a mortgage before you start looking for a property. This will give you a better idea of what you can afford and will make you a more attractive buyer to sellers.

Here are some additional tips for homebuyers in the current market:

  • Consider a longer mortgage term to reduce your monthly payments.
  • Be flexible on your must-haves.
  • Make sure you have a strong credit score.
  • Be prepared to negotiate with sellers.

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