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Following CPI fall, could we see sub-4% mortgages before the year is out?

ended 15. November 2023

Following news that inflation fell to 4.6% in October, some brokers have said mortgage rates could start with a three before the year is out, while others agree the 4% barrier could be breached in early 2024, which will significantly boost the property market.

Ashley Thomas, director at London-based broker, Magni Finance, was confident: “I fully expect mortgage rates to reduce further in the coming days and wouldn’t be surprised to see a number of lenders offering options sub-4% before the new year."

Kirsty Wells, director at Blueprint Mortgages & Protection, suggested that sub-4% rates could come in early 2024: “Following this extremely positive inflation data, there's a chance we could see sub-4% mortgages by early 2024 and the Bank of England reduce the base rate by the end of the second quarter of next year."

Justin Moy, managing director at EHF Mortgages, was also confident rates will go sub-4% before Easter next year: “The base rate will take some time to fall, as any improvements need to be consistent before Threadneedle Street considers reducing it. Towards the end of Q2 next year looks to be the consensus, and we should see a total reduction of 1% by the end of the year. This will encourage SWAP rates to fall, encouraging longer-term fixed deals to fall below 4% around Easter, if not before. It all depends on if mortgage lenders, after a subdued 2023, launch a January sale to kick 2024 off on a high.”

Ranald Mitchell, director at Norwich-based broker, Charwin Private Clients, said sub-4% rates could be widely available next year: “While today's inflation figures are extremely positive, we will need further reductions and stabilising of inflation before we see Bank Rate reductions. These will hopefully come in the first quarter of 2024. Mortgage rates, on the other hand, continue to slowly edge downwards and if lenders continue in the same manner which we have seen over the last few months, sub-4% mortgage rates may become widely available next year.”

Craig Fish, director at London-based broker, Lodestone Mortgages & Protection, said all eyes are now on the next inflation print: "If we  see further improvements in the inflation data on 18th December, I strongly suspect that the first sub-4% fixed rate, which will no doubt be for 5 years, will surface early next year as lenders fly out of the blocks."

But Graham Cox, founder of Bristol-based SEMH, said an election year could bring a base rate cut forward: “The pressure for the Bank of England to cut the base rate, from both the media and Government, will intensify in an election year. Despite Andrew Bailey's caution, I expect we'll see a cut by the Spring.”

John Choong, senior equity research analyst at Investing Reviews, said the following: “With the stickier elements of CPI in services inflation beginning to loosen up and energy prices normalising, the outlook for inflation is starting to look a little brighter. Considering the fact that approximately three quarters of the UK economy is derived from services, a slowdown in the sector could end up tipping the UK into a recession by early next year. If this comes to fruition, we can expect rate cuts from the Bank of England as soon as the second quarter, which would send mortgage rates tumbling further.”

But Jamie Thompson, director at Jamie Thompson Mortgages, said the 4% barrier is unlikely to be breached until Threadneedle Street cuts Bank Rate: “I don’t expect mortgage rates to start with a three until there is at least some reduction in the base rate. Lenders are already lending below the base rate for low loan-to-value mortgages. This is likely fuelled by them doing everything they can to cut their margins and get business in the so-called ‘rate war' that's raging."

Anil Mistry, director at Leicester-based RNR Mortgage Solutions, added: “Brilliant stuff with inflation hitting 4.6%, but don't hold your breath for the Bank of England to budge on rates next month. It's more likely they'll play the waiting game and reassess things in the new year. Lenders have been slashing rates consistently in the past month. I reckon we're in for more cuts, especially on the lower loan-to-value products. The proof is in the pudding, but rates have already taken a further dive in the past week, and that was before today's data drop. Sub-4% mortgage rates? Watch this space.”

Jack Tutton, director at SJ Mortgages, concluded: “Today's inflation figures will be welcome news to the Bank of England as it shows the measures they have been taking are having the desired effect. However, given that inflation is still over double the target of 2%, I cannot see them looking to reduce the base rate anytime soon. These figures will, however, breathe further confidence into the UK property market, as fixed rates continue to fall and at a faster rate than we have seen in the past few weeks. Whether this means we see fixed rates below 4% before the end of the year, only time will tell.”

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23 responses from the Newspage community

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Darryl Dhoffer
Founder at The Mortgage Geezer
Few would bet against the Bank of England now putting the handbrake firmly on the base rate. However, I'm not so optimistic about base rate reductions any time soon, as the target of 2% inflation is still some way off. But any further reductions in inflation in the first quarter of 2024 will heap pressure on Threadneedle Street to cut rates and save the economy from recession. With inflation reducing, lenders have just been handed a Teflon jacket to reduce rates further and keep the mortgage flames roaring. I expect lenders to respond very favourably to Wednesday's inflation print as rates were already edging down towards 4% before it.
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Justin Moy
Managing Director at EHF Mortgages
The base rate will take some time to fall, as any improvements need to be consistent before Threadneedle Street considers reducing it. Towards the end of Q2 next year looks to be the consensus, and we should see a total reduction of 1% by the end of the year. This will encourage SWAP rates to fall, encouraging longer-term fixed deals to fall below 4% around Easter, if not before. It all depends on if mortgage lenders, after a subdued 2023, launch a January sale to kick 2024 off on a high.
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Jack Tutton
Director at SJ Mortgages
Today's inflation figures will be welcome news to the Bank of England as it shows the measures they have been taking are having the desired effect. However, given that inflation is still over double the target of 2%, I cannot see them looking to reduce the base rate anytime soon. These figures will, however, breathe further confidence into the UK property market, as fixed rates continue to fall and at a faster rate than we have seen in the past few weeks. Whether this means we see fixed rates below 4% before the end of the year, only time will tell.
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John Choong
Senior Equity Research Analyst at Investing Reviews
With the stickier elements of CPI in services inflation beginning to loosen up and energy prices normalising, the outlook for inflation is starting to look a little brighter. Considering the fact that approximately three quarters of the UK economy is derived from services, a slowdown in the sector could end up tipping the UK into a recession by early next year. If this comes to fruition, we can expect rate cuts from the Bank of England as soon as the second quarter, which would send mortgage rates tumbling further.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
Brilliant stuff with inflation hitting 4.6%, but don't hold your breath for the Bank of England to budge on rates next month. It's more likely they'll play the waiting game and reassess things in the new year. Lenders have been slashing rates consistently in the past month. I reckon we're in for more cuts, especially on the lower loan-to-value products. The proof is in the pudding, but rates have already taken a further dive in the past week, and that was before today's data drop. Sub-4% mortgage rates? Watch this space.
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Graham Cox
Director at Bridging Hub
The pressure for the Bank of England to cut the base rate, from both the media and Government, will intensify in an election year. Despite Andrew Bailey's caution, I expect we'll see a cut by the Spring.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
I don’t expect mortgage rates to start with a three until there is at least some reduction in the base rate. Lenders are already lending below the base rate for low loan-to-value mortgages. This is likely fuelled by them doing everything they can to cut their margins and get business in the so-called ‘rate war' that's raging. There is finally light at the end of the tunnel, and I’m not just referring to next year's election.
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Kirsty Wells
Director at Blueprint Mortgages & Protection
There's a chance we could see sub-4% mortgages by early 2024 and the Bank of England Base rate reduce by the end of the second quarter next year. A lot of borrowers are coming to the end of their ultra-low fixed rate deals next year and are very nervous so it would be amazing to be the bearer of good news for a change rather than doom.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
While today's inflation figures are extremely positive, we will need further reductions and stabilising of inflation before we see Bank Rate reductions. These will hopefully come in the first quarter of 2024. Mortgage rates, on the other hand, continue to slowly edge downwards and if lenders continue in the same manner which we have seen over the last few months, sub-4% mortgage rates may become widely available next year.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
In light of the latest inflation print, I would expect the Bank of England to continue to hold the base rate until the of the first quarter next year at which point it should start to reduce. Lenders, however, based on swap rates and rate forecasts are likely to continue to reduce their fixed rate offerings to fight it out for market share. So great news for homeowners but businesses will have to wait longer for their reprieve.
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Craig Fish
Director at Lodestone Mortgages
Whilst today's better-than-expected inflation figure is good news, we are still more than double the 2% target, so no doubt we will hear Jeremy Hunt and Rishi Sunak today saying that we need to stick to the plan. Core inflation is also proving a little sticky which will cause continued concern. But if things continue along the same downward trajectory, and with an election looming in Q3 2024, I wholeheartedly expect to see the first base rate cut in Q2 2024. If we also see further improvements in the inflation data on 18th December I strongly suspect that the first sub-4% fixed rate, which will no doubt be for 5 years, will surface in early next year as lenders fly out of the blocks.
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Rohit Kohli
Director at The Mortgage Stop
There are still too many variables at play to be certain of a rate reduction anytime soon. Conflict across the globe and with major elections looming across both sides of the pond will likely mean a cautious approach from the Bank of England and I think we'll see rates held for a few months before there is any sign of confidence to reduce. Lenders however are competing with many wanting to hit targets so rate wars will continue for a few weeks with downward tweaks likley in the lead-up to Christmas.
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Imran Hussain
Director at Harmony Financial Services
I don’t expect the Bank of England to cut rates until q2 of 2024 at the earliest inflation will play a massive part in this but I do expect lenders get aggressive with pricing in 2024 to get the money out the door and lent so no later than q2 hopefully should see the return of 4% rates.
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Michelle Lawson
Director at Lawson Financial
Wednesday's inflation data will inject confidence into the markets and, unless any other curveballs come in, we should hopefully see some 'normality' return. We are seeing rates dropping regularly, which should also give consumers the faith to start moving. I think the base rate will start coming down early to mid-next year if this continues.
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Elliott Culley
Director at Switch Mortgage Finance
The Bank of England will keep their rhetoric strong over the next few weeks. They will point out that we are still some way from the 2% target, and have recently said the base rate must remain the same for most of 2024. There have already been predictions that the base rate will most likely reduce in May. If the inflation continues to fall and the economic forecast continues to worsen, it could happen much sooner, perhaps as early as the second quarter of next year.
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Kundan Bhaduri
Property Developer and Portfolio Landlord at The Kushman Group
Our predictions last month were right. Inflation is on a downward trend, and could drop below 4% by the end of the year. A rate cut in the December MPC meeting is now a possibility and the chance of mortgage rates going below 4% in early 2024. While the recent dip in October's inflation provides some stability for house prices, sellers should be careful. The journey to a strong recovery isn't smooth sailing yet. Recent figures from Tuesday show more companies facing financial trouble and more people seeking DROs. For the property market to fully bounce back, we need inflation to keep going down and meet the 2% target by Q2 2024. At the same time, if the Bank of England decides to cut rates strategically over the next 3 MPC meetings, it could give the real estate sector an extra boost. It's a delicate balance – managing inflation and making smart money moves. Even though things look a bit better now, don't forget about the challenges we're still facing. The end however looks nearer.
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Rob Gill
Managing Director at Altura Mortgage Finance
The Bank of England has been signalling a policy of 'higher for longer' in recent months, indicating we may not see a base rate cut until the latter part of next year. However, today's inflation numbers will increase confidence that we are now at the peak, gicing lenders the stability and confidence they need to carry on delivering mortgage rate cuts as they rebuild lending levels from a poor 2023.
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Gary Boakes
Director at Verve Financial
The positive inflation news and the recent 2 base rate holds have probably got us a little too excited, we still have a long road to go until we start seeing base rate drops, and with lenders looking to maximise profits, they will not want to drop rates too quickly, making their current pipelines margins and profit reduce. Expect rates to crawl to below 4% by late summer autumn, when we will expect to see the base rate drop. It is still a long hard road ahead of us, even with all the positive news.
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Gary Bush
Financial Adviser at MortgageShop.com
The more promising inflation figure at 4.6% does lead you to think that the Bank of England could start 2024 on a more positive note with a drop in base rate in their 1st Feb meeting. This drop in inflation, although still over double the government's target, will add further fuel to the UK mortgage lender fixed rate price war that has been raging for the past few months - so great news for the general public to come as we close out 2023 with lower mortgage rates.
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Ashley Thomas
Director at Magni Finance
I fully expect mortgage rates to reduce further in the coming days and wouldn’t be surprised to see a number of lenders offering options sub-4% before the new year. However, it is very unlikely the base rate will reduce before 2024.
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Luke Thompson
Director at PAB Wealth Management
I still think we will be looking at the end of 2024 before the Bank is able to start looking to cut the base rate. Although these inflation figures are positive and much more positive than I was expecting to see today inflation is still running hot and is nearly 3% above the government target.

I'm not sure we will see rates breach 4% before there is a drop in the base rate. But, on the other side of this banks have been in a bit of a price war in recent weeks potentially as they have missed out on significant amounts of business over the past year with a quiet property market and product transfer rates being so competitive. So maybe we could see a gimmick rate of sub-4 % from a lender with a high arrangement fee before the end of the year.
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Peter Stamford
Mortgage Expert at Stamford Home Finance
Today's encouraging inflation news hints at brighter days ahead. We're inching towards sub-4% mortgage rates, with real change expected by early 2024. It's a cautious yet hopeful outlook for the market.
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Ross McMillan
Owner/Mortgage Advisor at Blue Fish Mortgage Solutions
Today's inflation boost brings hope for mortgage rates. With inflation steadying, a base rate cut early in 2024 may become a genuine possibility but caution is perhaps more likely and it may be around the time of the Easter bunny before the Bank Of England starts dishing out any treats. Lenders, on the other hand, are already in fierce competition and this could drive borrowing rates down significantly quicker. Projections hint at 5-year deals nearing 4% by year-end, possibly dipping below 4% in 2024. Those tempted to gamble on 2024's rate speed may wish to consider tracker deals, however, with likely slower base rate reductions and fixed rates potentially hitting 4%, the risk of trackers may well far outweigh any potential rewards.