BoE Interest Rates Staying at 5.25% - But Experts Predict First Drop in 2 years

02-February-2024
02-February-2024 17:38
in Mortgage
by Sam Hodgson
BoE Rates Staying at 5.25% - But Experts Predict First Drop in 2 years

The Bank of England has decided to keep its rates at 5.25%, but the Bank of England Governor says they have a handle on inflation. 

The Bank of England Governor, Andrew Bailey, has released a statement saying that inflation has been falling steadily over the past few months and is now at approximately 4%. 

Bailey claims that keeping the Bank Rate at 5.25% will help reduce inflation further in the coming months. This suggests that if the Bank of England reaches its goal of getting inflation below 2%, the Bank Rate will also begin to drop. 

Our Head of International, Carly Cheeseman, confirms that mortgage interest rates have been dropping in accordance with this expectation. She has seen product rates drop by as much as 1% since the Christmas period, and 2-year fixes are beginning to stabilise.  

See similar: Are Mortgage Rates Going Down?

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Expert Insight: Consumers Are Buying & Lenders Are Reducing Rates 

In 2024 we have seen a lot more purchasing activity - it seems that brokers and consumers alike are feeling positive about the new year.    

We were expecting the base rate to stay the same, and I think everyone is waiting for it to drop now. There may be two decreases this year, but we expect this will be incremental to keep the market stable.   

Mortgage rates are beginning to drop, we’ve seen rates on products decrease by as much as 1% in the past six weeks. Lenders are reducing BTL stress-testing which is nudging the market along further. And we’re finally seeing 2-year fixes lower than 5-year fixes, which was the norm before 2022’s mini-budget. 

There were words of a crash in January, but that didn’t happen, and it’s looking less and less likely. Housing prices will likely stay static, but this may further encourage spending, especially if interest rates drop as predicted.

Carly Cheeseman
Head of International, Clifton Private Finance

The Bank’s Monetary Policy Committee is split three ways over the decision to keep the base rate at 5.25%, with six committee members voting to keep rates the same, two members in favour of increasing the Bank Rate by 0.25% to 5.5%, and one member backing a drop by 0.25% to 5%.  

Read blog: Should You Get a Tracker or Fixed Rate Mortgage in 2024?

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UK Survey: 85% Think Interest Rates Won’t Rise in 2024 

Regarding bank rates, the mood of the general public is mixed. Our recent Mortgage Pulse Report 2024 shows a high level of confidence when it comes to mortgage rates this year. In fact, 85% of those surveyed think interest rates will not rise in 2024. 

In accordance with our financial adviser’s statement, it seems the static market we saw in 2023 is a thing of the past. After over a year of sky-high interest rates, consumers may feel braver about committing to a purchase now that the market indicates a potential drop in rates. 

Related: What is a Professional Mortgage and Can You Get One?

How can you find an affordable mortgage in 2024?

Despite current positivity on declining mortgage rates, it can be daunting and confusing to figure out the best option.

We can help you compare mortgage products and their cost to find the best deal based on your specific situation from a wide range of lenders nationwide.

Expert mortgage advisors have their finger on the pulse of the latest mortgage market news. Whether you're a first-time buyer or looking to refinance or invest in a buy to let, we can help you understand your mortgage options so you feel confident you're making the right choice.

To see what we can do for you, call us at 0203 900 4322 or book an appointment below.

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