If you are keeping an eye on the property market then you may have noticed that after two and a half years of soaring growth, UK house prices have fallen including a 1.5 per cent drop in December,
The reason for these falling rates is mortgage interest rates. Mortgage interest rates are impacting buyers’ affordability. Last October, the average two-year fixed rate hit 6 per cent for the first time in the last 14 years.
Due to economic turbulence and inflation, the mortgage interest rate has shifted significantly in 2024.
Though it seems rates are forecast to continue falling all through 2024, the landscape is unsettling. In this article, we break down what is the current mortgage interest rates in the UK and explain what’s happening in the market.
Are Mortgage rates expected to rise or fall during 2024?
It is expected that the mortgage rates will gradually decline all through 2024, while the interest rates go up. According to some research, there is a prediction that fixed rates may fall below 4 per cent by early 2024.
In rising inflation, the Bank of England has increased the base rates several times in 2024. The recent change has brought it up to 4 per cent on 2 February 2024.
The Monetary Policy Committee of England is thinking of deciding on whether they should increase the base rates again on 23 March 2024. This committee looks set to continue raising the base rate interest in early 2024.
It is predicted to increase the rate by 4 to 5 per cent. If you are a mortgage tracker then you can experience your rates rise if the base rate is increased.
However, increases in the base rates don’t mean that mortgage rates will also be increased. Rates for fixed, SVR mortgage deals and discount deals have been decreasing recently and may continue to decline through the base rate increase.
How does the Bank of England base rate impact the mortgage rate?
The base rate of the Bank of England is maintained and organized to manage inflation. When inflation is low, they encourage borrowing and spending, they lower the base rate. So, the loans will become more affordable.
When the inflation is high and they want to reduce the inflation, the Bank of England will increase the base rate. The fact is that this will discourage spending and encourage saving.
If you are thinking about how the base rate will affect your mortgage rate, then it depends on what kind of deals you have.
- Tracker Mortgage:
The rates of the mortgage are directly linked to the base rates, rise and fall with it.
- SVR or Discount mortgage:
These mortgage rates are not directly linked to the base rate but have a greater impact of on SVR or Discount mortgage rates. So, these may increase or decrease if the base rate does.
- Fixed-rate Mortgage:
If you are on a fixed-rate deal, your rate will remain the same for the duration of the deal. But, changes in base rate can affect what fixed deals are available for and you can get a new mortgage.
What are the current mortgage interest rates UK?
On 16 February 2024:
- The average two-year fixed rate Mortgage rate in the UK is 5.16%
- The average five-year fixed rate Mortgage rate in the UK is 4.81%
- The average two-year variable rate Mortgage rate in the UK is 4.5%
- The average standard variable rate in the UK is 7.16%
This is to be noted that the above rates are the averages of different products of UK lenders and it is not to be indicative of the rate that you would be offered.
The rate you will be offered depends on your financial circumstances and the amount of deposit that you can put down.
The bigger the amount to be deposited the lower the loan to value allowing you to access better rates as lenders will find you as less risky.
What should I do if mortgage rates increase?
If you are stressed about the mortgage rate increase, then you can consider the following factors:
- Fixing your mortgage:
This will keep your mortgage rate fixed till a certain period. If your present deal hasn’t ended, make sure you are conscious of any early repayment charges (ERCs).
- Locking in a new rate:
If you are due for a new mortgage within the following 6 months, you can lock in a new rate now and can switch when your deal ends avoiding any early repayment charges.
If mortgage rates fall before ending your deal, then you can further switch to get a better option.
FAQ-
How can I know about the mortgage interest rates today?
Ans: Current Mortgage rates on 21 February 2024: The Bank of England base rate is: $.00% and the Standard Variable Mortgage rate is: 6.00%. to stay updated, you can search by Google. You will get updated mortgage rates daily.
What is the highest 30-year mortgage rate ever?
Ans: Mortgage rates in the United Kingdom averaged 5.61% from 1995 till 2024. It was raised at its peak of 8.87% in September 1998. It has a record falling low of 3.59% in November 2021.
What is a low 30-year mortgage rate?
Ans: In the United Kingdom, the Mortgage rates dropped to a low of 3.59 % in November 2021. During the last 30 years period it was the lowest fall. Because of the pandemic, 3.59% of the mortgage rate was below average for a 30-year mortgage.
What is the average mortgage interest for 2024?
Ans: According to experts, property valuation tends to decrease throughout 2024. So, it is expected that the mortgage rates also tend to decrease all through 2024. The average 2-year fixed rate mortgage rate in the UK is 5.14% (based on 75% LTV) and the 5-year fixed rate mortgage rate is 4.81% (based on 75% LTV) in the United Kingdom.
Conclusion:
While you are taking out a mortgage, you are taking out a loan that you require to pay back. In addition to the borrowed amount, you need to repay the interest on the amount you borrowed.
The amount of interest is determined by the mortgage interest rates. The higher the interest rate, the more amount you need to monthly repay. So, it is better to try and have a deal on low interest rates.
But, you need to make sure the factor of any additional charges. Looking for a mortgage in the present climate likely seems daunting. So if required, you can take expert advice.
