Last week, the Bank of England (BoE) took the decision to cut the base rate of interest from 4.75 per cent to 4.5 per cent. The move, which will undoubtedly be welcomed by mortgaged homeowners, brings the base rate down to the lowest it’s been since 2023.
But what does the interest rate cut mean for mortgages? And, to address the question posed in the headline, does the recent cut mean that now is a good time to remortgage?
Our team of Maidenhead mortgage brokers all agree that it is. Here’s why.
Locking in certainty
As Berkshire mortgage advisers that have been helping people get a mortgage since 2005, there’s one thing that we’ve come to be certain of: people generally dislike uncertainty. And there’s nothing like fluctuating mortgage rates for creating a breeding ground for uncertainty.
The last few years have seen nothing but rates rising and falling, which has primarily been driven by high inflation. However, the good news is that inflation appears to be stabilising. As a result, so too are mortgage rates.
If you’re currently on a standard variable rate mortgage, then you really shouldn’t be – irrespective of the base rate; it’s always more expensive than both than fixed rate mortgage deals and tracker mortgage rates. However, last week’s base rate drop has already led to a drop in UK fixed rate mortgage rates by many of the prominent UK lenders. So, if you haven’t already been thinking about getting a better mortgage deal, then last week’s rate cut should be giving you food for thought.
Interestingly, when the base rate falls, people often tend to want to hang on further in the hope of more rate cuts. The same principle applies with the stock market. In order to buy shares at the lowest rate, investors sit and wait. Sometimes this pays off, but sometimes the price per share inexplicably jumps up.
And this leads us onto our next point.
Multiple factors
Right now, our team of Maidenhead mortgage brokers can secure the best fixed rate mortgage deals in the UK, which are currently coming in around the four per cent mark.
However, all it takes is further global political unrest, poor UK economic performance or even eye-watering tariffs imposed by America for mortgage rates to be impacted – either directly or indirectly. And not only are these variables constantly moving, but they’re also outside of anyone’s control.
So, whilst the inclination might be to wait until the BoE cuts the base rate even further, which, as it stands, is what is expected – albeit on the back of what the BoE’s governor calls a ‘gradual and careful approach’ – mortgage rates could quite easily, quickly and unexpectedly increase.
Finally, it’s not just the base rate that determines mortgage rates. Swap rates, which are a much less understood variable, do, too.
As a Maidenhead mortgage adviser that has experienced interest rates at every end of the spectrum, we would advise that if you are within six months of your current mortgage deal ending that you get in touch with one of mortgage brokers in Berkshire.
And remember, if you receive a mortgage offer today, you have six months to take advantage of it (although we recommend that you view it as five-and-a-half months in order to build in enough application processing time). If, five months down the line, mortgage rates have decreased, then you simply apply for the rate of the day.
Nothing stays the same for very long. And when it comes to mortgage rates, things are continually changing. As a result, we recommend locking in some certainty by securing today’s rate, just in case today’s rate turns out to be a very good rate six months from now.
Is now a good time to remortgage? Our answer is ‘yes’, so why not let us manage it for you.
To secure the best UK mortgage rates, contact our Maidenhead mortgage brokerage as soon as possible on 01628 560820 or email enquiries@altonmortgages.co.uk to arrange an initial mortgage consultation.