Good news for homeowners and homebuyers alike! The Bank of England has cut the base rate for the first time in four years, signaling a potential shift in borrowing costs. As mortgage and protection experts, it’s crucial to explain how this impacts our clients.
What Happened to the Base Rate?
The base rate dropped to 5%, down from 5.25%. This is a welcome change after a period of rapid increases designed to control inflation. While a small cut, it suggests future borrowing costs will likely decrease further. Experts predict a base rate of 4.5%-4.7.5% by the end of 2025.
Impact on Mortgages
Although the base rate directly influences some loans, most mortgages (fixed-rate) rely on money markets which anticipate future base rate movements.
Here’s what you might be wondering:
- Will mortgage rates drop? Potentially. The recent base rate cut might push mortgage rates back to levels seen earlier in 2024. However, this depends on market expectations for future base rates.
- Are fixed-rate mortgages still a good option? Absolutely. With some uncertainty remaining, fixed rates offer predictability and peace of mind. Rates around 4-5% are still manageable for many buyers.
The Housing Market Outlook
The housing market is adjusting to higher rates, with a surge expected in 2024. We can expect:
- Increased buying activity: More homeowners are entering the market after holding off last year.
- Moderate price growth: Zoopla forecasts a 2% rise in average house prices by year-end.
- Improved affordability: Further income growth is anticipated, making mortgages more manageable.
Navigate the Market
The mortgage market remains competitive, with a wide range of deals available. Here’s how you can assist your clients:
- Shop around: Individual banks and building societies offer varying rates. We encourage clients to compare options.
- Leverage your expertise: As mortgage brokers, MMPE can access deals from over 70 lenders, maximizing the chance of finding the best fit.
- Free mortgage review: We offer free reviews, ensuring clients secure the most advantageous rates available.
- Market re-scan: If rates drop before the mortgage starts, we’ll re-scan the market to secure the best deal.
By staying informed and offering personalized guidance, we can help to navigate these changes and make informed decisions. Let’s help you achieve your homeownership dreams!
