Prediction for mortgage rates in 2024

In 2024, we foresee a continued decrease in fixed mortgage rates, contingent on positive market sentiment and the expected Bank of England base rate drop later in the year. The recent push by major UK lenders signals a competitive market, with hopes for more '3%' rates across all loan-to-values.

The long-awaited sub-4% deals have surfaced, triggered by moves like HSBC's, sparking a potential race to the bottom for more affordable rates. Throughout the year, we expect rates to hover around 3%, with the possibility of sub-4% 2-year Fixed deals by the end of Quarter 1, prompting base rate cuts in April or May.

Whilst the year has started with a trickle of rate reductions that may turn into a tidal wave initially with lender fighting for the 'top spot', I don't think we will see a continued reduction to the levels we saw certainly pre-Kwasi and co. However, with my crystal ball in the garage for its MOT, I'm not going to make any other sweeping statements!

It appears increasingly likely that we will witness widespread rate reductions as lenders strive to maintain competitiveness. There may even be bold moves by some, venturing below the 4% threshold to compete with institutions like HSBC.

My prediction is by the end of the year we will be seeing sub 3% rates, to stimulate the economy again we will see regular interest rate cuts in the latter half of next year, and speaking to a few contacts in some of the larger lenders they are briefing their staff of similar predictions for rates.
This will be a welcome boon to a lot of people who are currently financing their day-to-day lifestyles on credit, with a 43% increase in consumer credit there will be a wave of debt con for people who have over extended themselves

Looking at the cost of funds in the money markets - they have factored in potentially two 0.25% base rate cuts in the next 12 months - with out a working crystal ball, no-one can say for sure - but if the money markets are pointing this way - then thats a good starting point for me.

The other factor is competition - lenders always want to get ahead of new Year targets and so I think we'll see further drops in fixed rate costs with the addition of this more competitive market - there is clearly scope for them to start to tweak back on some of their fattened lending margins...

There are many factors affecting mortgage rates, but with current 5 year swap rates hovering around the 3.3% mark, there is certainly scope in lenders margins for more reductions. Many prospective buyers are holding off purchases in the hope of lower mortgage rates so the sooner lower rates kick in, the better.

Whilst the current crop of reductions are great, there will be a limit and I think we're getting close to it. Fixed-rate mortgages are based on swap rates, which is essentially a prediction of what the market feels the base rate will be at that point in time. Currently, swap rates for all periods are edging closer to 3% and that's been driving the falls in interest rates for consumers. However, back in the days of the 0.5% base rate the Bank of England always spoke about their desire to get the base rate to above 3%; as at this level, it was felt that savers and borrowers were both well served, with no one group benefiting too greatly at the detriment of another. I think we'll see the falls in rates slow as we see swap rates get close to that 3% level. Falls in mortgage rates then will be solely driven by market competition and individual lenders' desire to take on more market share. This is not a bad thing, as stability will give people more confidence to make big decisions.

I feel this will be a continuous trend but will be subject to what happens with swap rates and taking into account how the market reacts to any general election results this year.

I do not see rates falling to the low rates at the start of 2022 but being around the 3 to 3.5% interest rate brackets

With inflation if not exactly tamed, at least heavily sedated, there's every chance mortgage rates will continue to fall well into 2024. My best guess is rates in the 3.5-4% range by year-end. But, as Harold McMillan once famously said: Events, dear boy, events. Who knows how the Ukraine and the Gaza conflicts will play out this year and what impact they could have on the global economy.

It is very likely that a number of lenders will have rates below four per cent.

For people looking get a mortgage or remortgage soon, this is very positive – the best it has been for a while. It looks like the worst is over with inflation coming in lower than expected. Expect to see a mortgage price war early next year.

Our feelings are that 2024 will see fixed mortgage rates continue to decrease as long as market sentiment doesn't get knocked by any negative data being released, and the Bank of England does as expected and drops the base rate a touch on 23rd March. It's clear that UK mortgage lenders had a bad year in 2023 and some big hitters have come out of the traps in fighting spirit in the first week back to work - we'd like to see more rates being released with a 3 in front of them for all loan-to-values.

Mortgage rates will settle around the 3.5% to 4% mark for a 2-year fix in 2024, where they will stay until some clever sod decides to mess around with them to 'stimulate' growth. This will result in the next property cycle boom period as the insatiable, never-ceasing demand for property ownership coupled with the availability of credit cheaper than the middle aisle in Aldi instigates a decade-long surge in house prices which will eventually fuel runaway levels of inflation and an affordability crisis resulting in the next property 'crash' and rinse & repeat.

If there is one clear indicator we are in for a log flume-esque drop in mortgage rates this year it's the presence of the little guys shaking up the status quo. We are only 3 working days into 2024 and both Mpowered and Generation Home have launched products undercutting the old familiar market stalwarts. Generation Home struck first with it's sub 4% 5 year fixed rates for both purchase and remortgage at the end of December and now Mpowered have slashed their best 5 year fix down to 4.13%. With the drop in swap rates now allowing for greater profit margins, we have seen the likes of HSBC, Halifax and TSB respond almost instantly to this competition, including rates as low as 3.94% from HSBC. The people I really feel for are those that have just completed their remortgages, but for everyone else, it looks like there is now light at the end of the tunnel. So long 2023!

Down, down, down! As the first salvo has been fired by the big-name lenders, the rate war has begun. Lenders need to stimulate business and the only tool available to entice a wary public into borrowing is the cost of finance. Headline rates make news, but what is the overall cost when fees are factored in? That's another story. Whilst we need to be mindful of the continued impact of global events on the economy, we might reasonably expect 3% towards the end of the year but will the overall cost of borrowing be any different?

It certainly feels like where HSBC go, others follow so I'd expect to see a lot more rate reductions over the next few months. Great news for increasingly squeezed homeowners.