2024 Mortgage Forecast
There were high hopes that the June meeting of the Bank of England’s Monetary Policy Committee would see a dip in the base rate, but alas, it was not to be!
Don’t just reply on predictions and your own gut instinct – work with a mortgage professional and they’ll be able to guide you and find you the right deal.
The base rate is holding steady at 5.25%, but is there any hope at all for a drop before the end of the year? Maybe even at the upcoming meeting on 1st August?!
Current mortgage climate
Context is key when looking at the mortgage climate, so let’s take a look back at what’s been going on…
The base rate, which is set by the Bank of England to keep inflation in check and which directly impacts mortgage rates, had been low for quite some time, hitting an incredible low of 0.25% on 4th August 2016.
While there were some fluctuations over the years, they were fairly minor, going up to 0.75% in August 2020, before dropping back to 0.1% – an all time low! – in March 2020. But as we moved out of the pandemic, the end of 2021 saw the start of steady and regular increases in the base rate.
There were then 14 consecutive increases in the base rate until August 2023, leaving us where we are today – at 5.25%.
Now, given that the base rate hasn’t shifted in almost a year, people are starting to wonder… when will it change? … Preferably downwards?!
What could be coming up…
It’s worth remembering that we don’t – sadly – have a crystal ball, so we can’t say for sure what is going to happen by the end of the year, we can only report on research and make educated guesses.
At the May meeting, 2 of the 9 members of the committee wanted to reduce the base rate to 5%, so there was the hope that the next meeting would see a decrease.
The last meeting, on 19th June saw the same again – a majority of 7 voted to keep the base rate at 5.25%, while 2 voted once again to 5%. As this has happened at two consecutive meetings, it’s possible that this is indicative of a trend that could result in a drop at the next meeting.
Some experts are predicting a decrease in the base rate by the autumn, with some pointing to that meeting on 1st August as the first drop, and others a little further ahead to September. So the expert opinion is that yes – there WILL be a drop by the end of the year, we just don’t know how big or consistent that drop will be.
Mortgage rates have been fluctuating. Increases started when the base rate started increasing and then we had the disastrous mini-budget (remember that?) in September 2022 that caused rates to rocket.
However, they did dip a little in 2023 with the prediction that the base rate would ease down in 2024, so lenders were competing for mortgages and offering better deals. In June 2024, lenders including Barclays, HSBC and TSB have been cutting rates on new deals, which could be a sign of confidence in the MPC reducing the base rate at the next meeting…
But while these lenders are making cuts, other lenders are increasing, so are clearly hedging their bets.
Ultimately, mortgages are not as cheap as they used to be and with so much variation and fluctuation across the industry, this is definitely not something you’re going to want to face alone. Working with a professional, who is keeping a close eye on the news, markets and forecasts, is the wisest thing you can do in the current economic climate.
We’d love to hear your predictions – do you think the base rate will be lowered by the end of the year? When do you think we’ll see the first drop?
