The Summer is upon us, and the question on many prospective home buyers’ minds is: When will mortgage rates go down?
With a base rate update coming later this month (June 20th), and many feeling optimistic due to the recent drop in inflation, many wonder when significant change will take effect when it comes to their mortgage deals.
What is the UK Base Rate?
The base rate influences the rates that many lenders charge for mortgages, loans etc. The higher the base rate, the higher your mortgage will typically be.
Economic Factors Influencing The Base Rate
The economic landscape, primarily decisions made by the Bank of England (BofE), play a pivotal role in shaping mortgage rates. The BofE’s most recent base rate announcement kept the figure at 5.25%, which has been the consistent rate since August 2023.
As of recent however, more members of the Monetary Policy Committee (MPC) have advocated for a rate cut, a slight increase in support from previous meetings.
The decision to keep the base rate at such a high figure comes in the hopes of curbing the high inflation figures the country has been experiencing since 2022. As of April 2024, inflation has dropped to 2.3%, indicating the BofE’s target is being met, and hinting at a possible forthcoming decrease in rates, depending on future economic data.
Whilst this drop in inflation can be seen as a positive, it is not quite aligned with the projected target for this period of 2.1%, and because of that, it may delay a potential rate change.
Future Predictions on Mortgage Rates
Experts now speculate that a rate cut could occur as late as August or September 2024, rather than the initially hoped-for June.
For those considering remortgaging, it will be entirely dependent on your individual circumstances.
Consulting with a mortgage broker can provide insights into the best deals suited to your individual circumstances.
Looking Ahead: Base Rate 2025 and Beyond
There is optimism based on the latest forecasts that 2025 could see a more favorable turn in mortgage rates.
While precise predictions are challenging, the general expectation is that mortgage rates will eventually trend downward, albeit at a gradual pace.
For now, prospective and current homeowners should monitor the market closely, ready to act swiftly when opportunities arise to secure more favorable mortgage terms.
Want to know how much YOU could borrow? Click here to get an instant Mortgage in Principle. It takes about 10 minutes, and is completely FREE.