Mortgage rates ‘likely’ to drop – Britons told ‘no time to delay’ securing deal

Mortgage holders are being told there’s “no time to delay” to secure a better deal following the Bank of England’s decision to pause interest rate hikes this month.

The Monetary Policy Committee (MPC) chose to keep interest rates unchanged at 5.25 percent, which is currently instilling confidence in lenders to keep lowering rates. However, there’s “no guarantee” the Bank won’t raise rates further.

Thomas Jackson, managing director at mortgage broker Cooper Associates Mortgages, told Express.co.uk: “Act now. With greater support for buyers in the current market, and far more flexibility to secure the best rate possible, there’s no time to delay.

“After yesterday’s Base Rate decision and the better-than-expected inflation decrease the day before, it’s very likely we will see some reductions from lenders. I envisage this will happen over the coming days and weeks, rather than months.”

Ahead of the Bank of England’s decision on Thursday, a 0.25 percent increase was very much expected by lenders, therefore many priced this increase into their rates.

READ MORE: Mortgage lenders cut rates below 5% as Bank of England base rate held at 5.25%

Mr Jackson said this was the case until Wednesday’s inflation news. Following the unexpected drop from 6.8 percent in July to 6.7 percent in August, lenders have “felt confident” to lower their rates.

He added: “We have already seen two high street lenders make reductions of up to 0.31 percent on various products.”

In just a short space of four weeks, Mr Jackson said swap rates, which are what lenders used to price mortgages, have decreased by “nearly 0.6 percent for two and five-year swaps.”

However, Greg Marsh, CEO of household money-saving tool Nous.co pointed out that while the decision to keep interest rates frozen provides some relief for mortgage holders, there’s “no guarantee that the Bank of England won’t raise interest rates further” and the reality is that they’re still “punishingly high”.

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He told Express.co.uk: “The people who are going to suffer most are the 2.4 million households due to refinance before the end of 2024. This week’s news on interest rates doesn’t change the fact that they’re going to see their monthly payments rocket by thousands of pounds a year.

“Plus there’s no guarantee that the Bank of England won’t raise interest rates further if steep wage growth and high inflation persist. Households looking for a new mortgage are in a very tough spot and need to weigh up how much they are willing to gamble on rates falling next year.”

He added: “Rates for five-year fixes are lower than those for shorter terms, but people may end up paying more overall if rates come down. Sadly it isn’t possible to see into the future.”

Overall, competition among lenders has ramped up in recent weeks, and Tim Leonard, personal finance expert at NerdWallet UK told Express.co.uk: “Now they appear to have the platform to carry on vying for the attention of borrowers.

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“The key message to mortgage borrowers is to keep an eye on the market, shop around and consider talking to a mortgage broker. If your current deal comes to an end within the next six months and you’re thinking about your remortgage options, locking in a fixed rate now could be an option to consider.

“This would guard against rates rising before your existing deal ends. Then, if fixed rates continue to fall in the meantime, you could revisit your options as your mortgage’s expiry date gets even nearer and opt for a better deal if available.”

Mr Leonard added: “Remember that you’re looking for a mortgage that best suits your circumstances overall. Crucially, that may not necessarily be the mortgage with the lowest rate.”

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