Homeowners are due to experience “plenty of financial pain” despite mortgage rates being set drop, some experts are warning.
Brokers are reminding households that potential cuts to interest rates remain months away and will likely not take place until summer 2024.
Mortgage holders have been forced to contend with sky-high mortgage rates over the past year but recent developments have signalled the property market could be improving.
Justin Moy, managing director at EHF Mortgages believes interest rates will start coming down in June 2024.
Mortgage rates are expected to come down in the New Year
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According to the mortgage expert, the UK’s base could drop to around four percent by this time next year.
He explained: “Naturally, this assumes lots of other issues don’t get in the way, such as above-inflation pay rises, fuel costs are contained, and our overall inflation continues a slow decline towards that target of two percent.
“We have plenty of financial pain to come in the coming months, but to drive down rates we need a little sufferance first, unfortunately.”
In the last year and a half, the Bank of England has hiked rates 14 consecutive times in an attempt to mitigate the impact of inflation on the economy.
Recently, the central bank paused raising the base rate any further amid signs of Consumer Price Index (CPI) inflation easing.
The Bank of England’s base rate is at 5.25 per cent which is a far cry from the record 0.1 per cent low in December 2021.
While some lenders have slashed mortgage rates for customers and new homebuyers, many Britons are still being priced out of the property market.
Currently, a fixed-rate deal is the most common type of mortgage in the country which means many still face paying substantially more in repayments when their deal comes to an end.
LATEST DEVELOPMENTS:
The Bank of England is keeping rates at 5.25 percent
PAAccording to Moneyfacts, Barclays is offering the most favourable deal on a two-year fixed rate mortgage.
As of December 2023, the average two-year mortgage is 4.58 percent while the average five-year mortgage is sitting at 4.57 percent.
The Bank of England will announce any further updates to interest rates on February 1, 2024.