Will fixed mortgage rates go below 4%?

The best current fixed rates are sat at just under 4.5% – I can see below 4% rates making a comeback. We are in the midst of a competitive market between lenders, with constant rate updates and reductions. The doom and gloom from the back end of last year caused some buyers to put the brakes on. However, with the market settling down, interest rates reducing and more properties bouncing back onto Rightmove – rates dropping below 4% would be welcomed by the housing market. I predict that they will have fallen below 4% by March. As the sunshine returns, I hope we see interest rates start to thaw, providing comfort to those buyers that have been waiting for the market to improve. Those needing to remortgage should be arming themselves with a good broker with their eye on the ball, to ensure they secure the best rate possible.

What we have learned from the past 12 months is that every prediction is a guess. It is very conceivable we will see two-year rates hit 3.99%, but, do not hold out on the wish. Start talking about your new mortgage needs six months before the current deal ends, make sure you know what you want and what you can afford – focus on the monthly payment and let the adviser give you options. Don't get fixated on fixed rates, of course, your mortgage is important but pricing is out of your (and your adviser's) control, they give you a recommendation that best suits your needs.

It's possible lenders will introduce sub-4% mortgages but they will probably come with hefty product fees to compensate. And only if the Bank of England doesn't raise the base rate from 3.5% on February 2nd, which is unlikely in my opinion.

We're already seeing many fixed rates in the low 4% mark. So, sub-4% deals are foreseeable, particularly where the client has a large amount of deposit/equity, albeit I would imagine it would have a £1000+ fee too.

If you’re looking to remortgage in the next six months, I would recommend caution with holding off for something that may never come. You risk potentially ending up in a worse position – we saw last year how easily the financial markets can be spooked and rates shot up. Unless your mortgage is very large, the real-world difference between a 4.28% rate and a 3.99% could actually be quite small.

With the reduction in rates we have seen since the beginning of the year, it's highly likely that we could see them drop to below 4% shortly as confidence has now returned to the market. To compensate for a lower rate, lenders will charge a higher arrangement fee to keep a margin.

For those looking to remortgage in the next six months, now is the time to get the ball rolling and explore what options are available by speaking to a local independent mortgage broker.

Currently, we are seeing payable tracker rates as low as 3.74% and fixed rates as low as 4.31%. I see a lot of possible benefits for clients having flexibility over the next five-to-six months. We'll see further competition between lenders over the coming months and although we'll likely see a slight rise in the base rate, we will likely see further reductions in fixed rates and I think these may drop below 4% by March, if not sooner. However, I also think in some areas of the country we will see a further reduction in property prices and this should be considered in individual cases. As always, you should speak to your advisor to make sure you make the correct plan for your situation.