Our last article entitled ‘Are mortgage lenders about to tighten their belts?’ explored how our 2024 mortgage predictions, set out in this article, were potentially in jeopardy following recent news that the banks are set to restrict lending next year.
However, following the Bank of England’s (BoE) decision to hold the base rate of interest at 5.25 per cent – for the third time in a row – we’re doubling down our view that 2024 mortgage rates are going to be much more favourable than those seen in 2023.
But why exactly?
2024 mortgage rate forecast
Even BoE governor Andrew Bailey has said that he expects the base rate to remain at 5.25 per cent for some time. Whilst he’s also ruled out any cuts to the base rate for the foreseeable future, a stabilised base rate is good for consumer confidence.
After all, if rates aren’t continually moving up – even if they’re not moving down – then existing and potential homeowners can start planning and making decisions with regards to applying for a mortgage in 2024.
Our team of Maidenhead mortgage advisers has already seen mortgage rates come down over recent weeks. Now that the base rate has been fixed – and looks set to stay – at 5.25 per cent, we expect mortgage rates to gradually fall over the next 12 months, with rates bottoming out at 3 – 4 per cent in 2025.
Gilty pleasure
A sure sign when it comes to falling mortgage rates is falling gilt yields. If gilt yields fall, then so do mortgage rates. And, at the time of writing, they are tumbling.
The beginning of the financial crisis in 2008 saw yields at 4.5 per cent, before they gradually fell over 12 years to a low of 0.1 per cent in 2020*. Whilst the economic jolt we’ve seen over the last two years has seen them quickly rise back up to over 4.3+ per cent, they’ve now dropped to just under 3.8 per cent – in the last month alone.
And not only do we have a stabilising base rate of interest and falling gilt yields, but money markets are already pricing in an anticipated cut to the base rate to as low as 4.25 per cent by the end of 2024**.
So yes, things are looking up for the mortgage markets. And, more importantly, things are looking up for those looking to get a mortgage in 2024. But remember, any cuts won’t be dramatic – so waiting for that big drop is unlikely to be a good strategy.
If you’re thinking of applying for a mortgage in 2024, get in touch with our Maidenhead mortgage brokerage today on 01628 560820 or by emailing enquiries@altonmortgages.co.uk.