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Mortgage rates, when will they go down?

Journalist: Catherine Lafferty, iNews

ended 12. April 2023

When will mortgage rates go down? What should borrowers do in the meantime? 
Should they leave trackers?

11 responses from the Newspage community

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Katy Eatenton
Mortgage & Protection Specialist at Eatenton Finance
Fixed rates are still creeping down slowly, with several lenders offering below 4% on low LTV products. BTL rates are also lower than we have seen in the last 6 months, the lowest being 4.01% from Virgin at 60% LTV.
A tracker is still a good product if you don't want to be tied in and incur early repayment charges, but the lack of stability doesn't appeal to everyone.
Advice is so crucial at the moment, as the decision will be based on the client's attitude to risk, rather than just what the lowest rate is right now
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Bob Singh
Founder at Chess Mortgages
According to the IMF we will see rates drop to pre pandemic levels! This may appear to be an outlandish forecast but it can happen but not quickly enough to repair the damage done by the Truss budget .

Inflation needs to show a clear trend downwards for the BofE to start the descent but it will be slowly based on emerging economic data.

I expect rates to start falling in the Q3 Q4 this year down to 3% in Q1 2024

Many variables and headwinds still persist and may alter the course being navigated by the BofE
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Riz Malik
Independent Financial Adviser at R3 Wealth
With falling inflation, interest rates could begin to fall later this year and into 2024. However, as we have seen time and again, all it takes is one shock to derail all projections. Rates rose quickly but will be slow to fall, especially given the number of hawks on the Monetary Policy Committee
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Rohit Kohli
Director at The Mortgage Stop
It's the question everyone one wants the answer to but no one can actually answer. There are a lot of factors that will drive this but the key one is inflation. If rates come down in any meaningful way before the end of the year it will surprise a lot of economists. The best course of action for someone to take is speak to an expert - they can review your circumstances fully and advise you on the best solution for your circumstances as everyone's circumstances are unique.
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Justin Moy
Managing Director at EHF Mortgages
Rates have continued to slip for a few weeks now, with a number of lenders offering sub-4% deals for those with larger deposits or good equity in their property. But wherever you look at the moment, the suggestion is that rates will continue to reduce for the remainder of the year, and into 2024 - just don't expect them to fall off a cliff, just meander down the country road for a while. In the meantime work with a qualified mortgage broker to understand the options you can work with now, ensure the product chosen fits your plans, and don't try to beat the market - it normally ends in tears...
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Craig Fish
Director at Lodestone Mortgages
Following recent events, trying to guess what will happen to interest rates generally ends badly, nevertheless, it's a given that rates are going to drop in the not-too-distant future. Inflation is set to drop and the MPC is going to have to do the same with the base rate, but not to the extent that the IMF predicted. I suspect the base will settle around 2.5 - 3%, and therefore I suggest that those with a tracker hold their nerve for another year or so and then potentially make the switch. However, as with any mortgage, it's more about affordability than the actual rate. People need to stop being so hung up on interest rates and focus more on what is affordable and what isn't. Maybe then people won't be so disappointed as they have set their expectations too high on things that they cannot control.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Trying to predict future mortgage rates, or anything else for that matter is a dangerous game. Only hindsight will tell us what the right decision was, so my advice to borrowers is to focus on what's most important to them and the outcomes they are looking for. If certainty over monthly mortgage payments is key, then a fixed-rate mortgage will provide that without the sleepless nights and stress over what could happen to mortgage rates over the coming months.
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Graham Cox
Director at Bridging Hub
Mortgage rates will possibly fall late this year or early next if inflation falls as quickly as expected. But there's no guarantee. Increasing wage demands could propel the UK economy into an inflationary spiral. And whilst Putin is waging war in Ukraine, geopolitical tensions will add to the uncertainty.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
Predicting the exact timing of a decrease in mortgage rates can be challenging. However, recent reductions in swap rates have had a significant impact on how lenders set their pricing. As such, it is recommended that borrowers not delay in securing a mortgage and avoid gambling on potential rate reductions. In the event that a borrower has not yet completed their mortgage and rates are subsequently lowered by their lender, most lenders will permit a change to the new, lower rate, and offer a new mortgage, provided that no other modifications have been made and circumstances remain the same. Our firm has recently facilitated this process on several occasions.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Trying to guess the path of interest rates is, more likely than not, going to end badly for most people. It is out of their control and an unknown quantity in the decision-making process, especially if we are trying to guess the path of interest rates over years; how many people taking out 2-year fixed rate deals at the end of 2020 expected fixed rates to be nudging 6% in 2022? Concentrate on the factors that are in your control; do your plans need flexibility, or can you see little change over the next few years? Can you afford to see your mortgage payments increase if interest rates rise? Do you plan to move, or think you'll need to borrow more in the next few years? Spending time thinking about these factors, which are far more in your control, is more likely to get you to the right mortgage deal than trying to guess what is going to happen to interest rates.
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Gary Bush
Financial Adviser at MortgageShop.com
Fixed mortgage rates have been declining and "all being well" they should continue to do so. We are against using trackers at the moment as the UK is balancing on a knife edge from the threat of inflation which could mean more Bank of England base rate increases taking lenders' variable rates higher, and indeed their trackers, with them. Our feelings are to take one of the recently released 2-year fixes to give some monthly mortgage payment stability and see how the land lies when our systems contact clients in 20 months' time with a potential replacement, and potentially more competitive, fixed-rate deal.