Millions of homeowners on tracker mortgages could see their repayments cut by £300 a month from June
The base rate has hit record highs since it started to rise in December 2021
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Those on tracker deals could be saving £300 a month when the base rate eventually falls, figures show.
Following 14 consecutive rises, homeowners on tracker mortgages have been patiently awaiting a time in which their monthly payments will come down.
Since December 2021, the Bank's rate-setting Monetary Policy Committee (MPC) have raised the base rate 14 consecutive times, to its current level of 5.25 percent.
These increases resulted in significant rises in mortgages for around 1.5 million homeowners, currently on variable rates.
With many experts predicting the base rate will drop in upcoming months, those on the standard variable rates could be in for a huge saving each month.
Mortgage borrowers on these “tracker” deals could be saving around £300 a month by the end of the year once the base rate finally begins to fall.
Those on tracker deals could be saving £300 a month when the base rate eventually falls
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Analysts at Capital Economics predict the base rate to drop for the first time in more than four years this June.
The MPC could lower the rate by 0.25 percentage points at their meeting after next.
Paul Dales, chief UK economist at Capital Economics, said the base rate will most likely stand at four per cent by the end of this year, before dropping to three per cent in 2025.
He said: “I can’t say the first drop will be in June with great confidence but that’s where we are at the moment.
“It’s then looking like we’ll be at four per cent by the end of the year.”
The last time the bank rate was four percent, the average two-year tracker deal was 4.48 per cent, according to data firm Moneyfacts.
Currently, a mortgage-holder with £300,000 left on their 25-year home loan will be paying £1,959 a month based on the average tracker rate of 6.14 per cent.
If the tracker rate falls to 4.48 per cent by the end of the year, homeowners will see their monthly payments drop by £295 to £1,664.
Mr Dales continued: “When the Bank Rate drops, those on variable deals will get the benefit before anyone else, which will be very welcome as they’d have been feeling pain even more so than others.
“It’s always a bit of a gamble taking one on, but I’d have thought the share of trackers would definitely go up as the Bank Rate comes down.
“It’s pretty clear interest rates won’t be going up further so anyone who is feeling brave might go for one.”
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Standard variable rate (SVR) mortgage holders normally receive news on if their mortgage is going up a few days after any base rate change has been announced.
Customers are usually placed onto an SVR mortgage when their current deal ends.
About 1.6 million deals will expire in 2024, according to banking trade body UK Finance.
Millions could see their repayments increasing by thousands. Some estimates suggest someone could be paying £2,000 a year more.