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Mortgage rates below 4%

Journalist: Callum Mason, i

ended 10. May 2024

Given today's base rate hold, off the back of week's of increasing mortgage rates, households will be wondering how long it will be until rates start to go down again.

How long will it be before we see 5-year fixes below 4% again? Is this a possibility this year, and if so, would this only be for the very lowest LTVs (60%)?

9 responses from the Newspage community

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Platinum
Dariusz Karpowicz
Director at Albion Financial Advice
Even if I were the biggest optimist, I'd say the earliest we might see 5-year fixed mortgage rates dip below 4% would be just before the year's end, and even then, likely only for the very lowest loan-to-value ratios (LTVs) in the market. Given the current economic climate and recent trends, any significant deterioration in market conditions could push this possibility out even further. So, while there's a chance for lower rates towards year-end, it's contingent on stable or improving economic indicators. Keep an eye on the market's direction and plan accordingly.
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Platinum
Ben Perks
Managing Director at Orchard Financial Advisers
The Bank Of Englands decision to move at a snails pace certainly isnt helping things. As we approach the midpoint of the year we find ourselves still waiting for the rates to return to the competitive environment we saw in January.
If the Monetary Policy Committee continue to dilly dally, we may not see the significant drops that we had hoped for in 2024, which would be dissappointing.
Rates need to reduce across the board, especially for borrowers with lower Loan to Values, but stability is what's really saught after. I'm sure we will see sub 4% rates available for 5 year products again this year, but we need them to stick around for a prolonged period of time.
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Platinum
Simon Bridgland
Director at Release Freedom
I wouldnt be hold your breath for any 5 year fixed rates under 4% until the end of the year at best. Even if they did appear they would most likely be for deals at 60-65% loan to value. With so much uncertainty and volatility in the world having an impact on wholesale financial markets, it isnt going to translate to the utopian rates of the past. For those thinking they can scoup a better deal by holding on a little longer, perhaps they should replan their strategy.
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Platinum
Ken James
Director at Contractor Mortgage Services
The decision to hold rates as we all expected was not unexpected, the impact on rates has been minimal as lenders were already pricing ahead of the expected outcome. This has been felt by brokers and clients alike over the last few weeks rate hikes coming thick and fast with a small exception of some lenders making some minor reductions. The clients are now braced for this new normal of higher rates. In my opinion we will end up in the 3-4% range as the standard for most Loan to value brackets but I do not see this happening till early next year at best.
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Premium
Graham Cox
Director at Self-Employed Mortgage Hub
Four percent mortgages could return within months if we get a base rate cut in June. But it's a big if, and the Bank of England under Andrew Bailey's stewardship are notoriously cautious. However once the base rate falls, the floodgates will open.
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Premium
Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
The SONIA swap rates that retail fixed rate mortgages are priced from are essentially market predictions of the likely Bank of England base rate at a future point in time. As the widely predicted cut in base rate is moving further and further into 2024, swap rates, and the fixed rates you and I can access, have been increasing. A cut may not change that, as the current fixed rate deals have already priced in the forthcoming reduction, once the Bank do make a decision to cut, it may simply stop the increases we are seeing. So, what would give us a real reduction in fixed rates? If the Bank signals more, quicker, or bigger reductions than the market has predicted, that will most likely see swap rates move too, resulting in a drop in the fixed rates lenders can offer borrowers. If you are looking at tracker or discounted mortgages then any reduction in the base rate will have a far more immediate impact, as these are not linked to the swap rates that fixed rates use.
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Gary Bush
Financial Adviser at MortgageShop.com
Sub 4% mortgage deals, Wishful Thinking - maybe not. We have been here since the 2022 mini-budget chaos, albeit for a brief period but we have seen these - they're not Dodos honest. The leading factor for mortgage lenders on this will be some long-awaited downward movement from the Bank of England's base rate and now it seems like we should all be praying until 20th June for this finally to occur.
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Tracey Dixon
Owner/Broker at Pure Mortgage and Protection
Don't Hold Your Breath for below 4% Mortgages Just Yet

Even the sunniest outlook suggests 5-year fixed rates below 4% might not arrive until December, and even then, only for the biggest down payments (low LTVs).

The shaky economy could easily delay this further.

Here's the reality:

The Bank of England's slow action isn't helping.
We're past the halfway point, and rates haven't returned to January's competitive levels.
Continued delays by the Monetary Policy Committee could mean missing out on significant drops in 2024.
The good news? Sub 4% rates are likely this year, but we need them to stay, not just flicker for a moment.
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Peter Stokes
Director of Mortgages at Davidson Deem
Before we see 5 year fixed rates below 4% base rate has to move. Without doubt the money markets are not guessing on if base rate will fall, but when. Once the Bank of England lowers base for the first time, we will be on the downward slope, which should result in the lower fixed rates we are all hoping for. My guess is this will happen this year, but maybe not for a few months yet.