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A week on from the highly anticipated Bank of England base rate reduction, we have seen some really positive changes in the pricing of mortgage products.
The decision to reduce the base rate was a very close vote by the Bank of England.
It came as a relief to economic markets and borrowers alike however the Bank of England gave no indication, in their review, that there were many more base rate reductions to come.
The general consensus amongst economic analysts was a further 0.25% reduction may happen between now and the end of 2024.
Andrew Bailey the Bank of England’s Governor has been quoted as saying, there is little chance of a return to ultra-low interest rates.
A new norm for interest rates, according to economists would be similar to pre-2008 levels – lower than current, but higher than pre-2021 levels.
Clearly The Bank of England will be cautious in reducing interest rates for fear of encouraging consumer spending and thereby fuelling inflation.
Even slight inflation increases would lead to extended delays in future base reductions.
The Bank of England has to balance global issues as well as economic factors specific to the UK, when making future decisions and at present there are a lot of global issues to contend with.
Mortgage products had seen some modest reductions in interest rates, prior to the Bank of England decision and the belief was that last week’s base rate reduction had been priced in by lenders.
Well what a difference a week makes!
We have seen lenders reducing interest rates across their entire product ranges, which has been great news for buyers and those looking to remortgage their homes.
One key milestone this week has been some 5 year fixed rate mortgage products being priced below 4% which is really significant.
These products are only available to borrowers who meet the lender’s criteria and require a minimum 40% equity at present.
However, it does demonstrate that the mortgage market is moving quickly and positively, regardless of the current Bank of England policy or for that matter wider Global issues.
Whilst it is impossible to know what will happen over the next few months, it is crucial, if you are looking at your mortgage options, to discuss your requirements with a fee free, independent mortgage advisor to ensure that you secure the lowest cost mortgage for your particular circumstances.
At John German we work alongside APR Money Ltd who can provide advice across the whole of the mortgage market and a thorough review of the lending options for clients, to secure the most cost effective and appropriate product for your needs.
Book a no obligation appointment here and a mortgage advisor will be in touch ASAP.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Date Posted
August 12, 2024
Article Category
Author
Lucy West
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