By Mark Dickety on



The Bank of England held the Bank Rate at 5.25% in its February 2024 meeting, a move that was widely anticipated by market experts. The general view is that we are at the top of the rate rise cycle, having undergone 14 consecutive rises between December 2021 and August. Current economic data indicates that interest rates will start to be cut in the second half of 2024. With a brightening economic outlook, interest rate expectations in the monthly consensus forecasts have been improving over recent months. The latest consensus forecast is for the Bank Rate to reach 4.5% by the end of the year, an improvement from the 5% forecast in September 2023 (HM Treasury Average of Independent Forecasts).

Overall lenders remain in strong competition; the majority have made cuts to their fixed rates this week, but a few have increased them slightly. The average cost of a two-year fixed deal is still down from last month, currently at 4.73%, while the five-year fix is 4.38%. Sub 4% deals are available, with the leading five-year and two-year deals at 3.79% and 3.88% respectively ( TSB cut selected fixed rates this week by up to 0.55%, Halifax by up to 0.53% and Virgin Money by up to 0.40%. Some products have been withdrawn from the market in the last week, having sold out quickly. Lenders are becoming more flexible in their criteria and are using creative ways to attract customers, such as loosening criteria on the self-employed.

Mortgage approvals reached a six-month high, increasing to 50,500 in December (Bank of England). This is the third monthly increase in a row, indicating the return of pent-up demand and an increase in market momentum. Consumer confidence levels reached their highest level since January 2022 (GfK Consumer Confidence Tracker). Confidence in the UK mortgage market rebounded in the final quarter of 2023, with 83% expressing confidence in the market outlook in December 2023, a strong rise from 65% in the same period the previous year (Intermediary Mortgage Lenders Association).

The number of people looking to move is increasing, because they believe that by the time they do move, mortgage rates will have dropped. The gap between two-year and five-year fixed rate deals is shrinking, and two year deals are proving popular, with the consensus that bank rates will fall from their current peak. Using a mortgage professional or broker to keep an eye on the best deals and options for product switching is important for securing the lowest rates for customers who may be considering moving.

The lowest rates for first-time buyers have seen little change over the last few weeks, however competitive deals are available, some offering incentives such as a free valuation, cashbacks and no product fees.


Disclaimer: The above is for information only. Independent regulated financial advice should always be sought when considering mortgage matters.

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Mark Dickety
Mark is an experienced Mortgage and Protection Adviser who has been providing mortgage advice since 2010. He thrives on finding the right solution for each of his clients' requirements ensuring they have the best experience possible.
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