Providing expert mortgage advice for over 28 years.
Providing expert mortgage advice for over 28 years.
As mortgage rates keep falling and the Bank of England’s base rate is at 5%, many homeowners and first-time buyers are asking: Should I fix my mortgage now or wait for even lower rates (if available)?
With more rate cuts possible, it can be tough to understand today’s mortgage market. This guide will look at the trends affecting fixed-rate mortgages, future rate change predictions, and how the team at Newhomes can help you make the right choice.
Whether you’re a first-time buyer or want to remortgage, we will explain the options available and how you can benefit from the current mortgage situation.
The Bank of England kept its base rate at 5% in September 2024. Still, mortgage rates have been going down since July. Earlier this year, fixed-term mortgage rates hit a high point. Two-year fixed mortgage terms reached their highest levels in a long time.
Since then, lenders have been changing their offers to match the market. Now we can see better fixed-rate deals.
This drop in rates comes mainly from money market trends. Lenders are getting ready for future interest rate cuts. This helps borrowers get better deals. Swap rates are down, which shows long-term interest rate views. This allows lenders to offer cheaper fixed-rate mortgages. The nice thing for borrowers is that these lower rates (if available) let them have easier monthly payments than before this year.
The recent drop in mortgage rates is due to several reasons:
After a long time of increasing rates, the Bank of England made its first cut in August 2024. They lowered the rate from 5.25% to 5%.
Even though inflation has gone up to 2.2%, which is a bit over the goal, experts think the Bank of England will keep lowering rates slowly over the next one or two years.
Most money experts say that the base rate will drop to 4.75% by the end of 2024. There could be more cuts in 2025, which might lower the rate to 3%. But this may take a long time. The Bank of England has to think about keeping prices stable while also helping the economy grow.
For borrowers, this means that while mortgage rates will probably keep going down, the drops will be small and not big. It’s good to think about your own money situation and goals when deciding if you should lock in a rate now or wait for future savings.
Deciding if you should fix your mortgage rate now or wait for more rate cuts involves several factors. These factors include your own money situation and how much risk you can handle. Let’s look at the main points to think about:
As mentioned before, mortgage rates have fallen a lot since their high point earlier this year. Many suitable fixed-rate deals now come with much lower monthly payments than what was offered just a few months ago.
While rates might keep going down, the savings from waiting could be small. This is especially true when we consider the chance that rates might go up again suddenly because of unexpected changes in the economy.
For many borrowers, getting a fixed-rate mortgage now is a smart choice. If you want to know what to expect with your payments, it helps to avoid problems caused by changing rates. When you lock in a fixed rate, your monthly payments will stay the same for a certain time. This can give you comfort, even if the market changes later.
For people who want to remortgage, the current situation is a bit harder than for new buyers. Remortgage offers have taken more time to match the lower purchase rates. However, this difference should close as we get closer to the end of 2024. Lenders should bring better deals for homeowners who want to change mortgages.
If your fixed term is ending soon, it is smart to begin checking your choices now. Lenders may start to compete more for remortgaging customers. This can lead to better deals in the near future.
At Newhomes, our mortgage brokers are here to help you compare remortgage options. We will help you find the most suitable deal for your needs. Working with a mortgage adviser from Newhomes can help you get most suitable rate. It will also help you avoid any unnecessary fees or penalties.
If you want flexibility and can handle some risk, a tracker mortgage could be a good choice. Tracker rate mortgages change with the Bank of England base rate. This means your monthly payments will go up or down with those rates. This could be a good fit for people who think rates will drop for a while.
However, it’s important to know that tracker rates are now higher than fixed rates. So, while you might gain from future rate cuts, you could end up paying more if the Bank of England holds off or changes its plans on rate reductions.
If you want a tracker mortgage but also want the option to switch to a fixed-rate mortgage later, look for a deal without early repayment charge. This way, you can move to a fixed-rate deal when the time is right without paying any penalties.
Variable-rate mortgages can give you some flexibility, but they also have some risks. You might get lower payments in the future if rates go down. However, your payments might go up if the economy gets worse. Because of this, variable-rate mortgages are a good choice for borrowers who feel okay with changing payments and can adjust quickly to market changes.
For many borrowers, the chance to secure a fixed-rate mortgage now is appealing. Fixed-rate mortgages provide stability over time. This means your monthly payments stay the same, no matter what happens in the economy. With these long-term deals, you are safe from surprise rate increases and can enjoy the lower rates we have today (if available).
Most lenders let you lock in a new rate up to six months before your current deal ends. This means you can get today’s low rates while having time to look at the market again before your fixed term begins.
Also, some lenders allow borrowers to change to a lower rate if it comes up before the fixed term starts. However, it’s important to check for any fees or early repayment charges.
If you are near the end of your fixed term, now is a great time to look at your choices. At Newhomes, our team of mortgage experts can give you advice made just for you. They can help you decide if you should secure a fixed-rate mortgage now or wait for lower rates (if available). By working with one of our advisers, you can feel sure that you are making the best choice for your situation.
In the past, five-year fixed mortgages cost more than shorter two-year deals. But now, things have changed. Five-year fixed-rate mortgages are often cheaper than two-year ones. If you want a steady payment plan, a five-year fix gives you peace of mind because your monthly payments will not change for a long time.
With future rate cuts likely, shorter-term fixes may seem appealing. These might include two-year deals. Still, if you want stability and do not want to remortgage often, getting a five-year fixed-rate deal could be your best choice. It protects you from sudden rate increases and keeps your payments steady for five years.
At Newhomes, we know that picking the right mortgage term can be hard. That’s why our team is ready to give you personal advice based on your goals and money needs. Whether you want a short-term deal or long-term safety, we will help you get the best choice.
“Mortgage rates are falling, making it a good time for first-time buyers to consider locking in a fixed rate. While rates could drop further, locking in now can provide peace of mind against future increases. With our mortgage rate check service, you can easily switch to a lower rate if one becomes available.”
Craig Moore, Partner at Newhomes
For people close to finishing their current home loan, there are two main choices: a product change or getting a new loan with a different lender.
At Newhomes, we help clients compare various deals from different lenders to make the right choice.
If your mortgage deal is done and you are now on your lender’s standard variable rate (SVR), you are probably paying too much. SVRs are much higher than most fixed or tracker mortgages, usually about 8%. This means you could potentially save hundreds of pounds each year by changing to a new deal.
At Newhomes, our mortgage brokers focus on helping homeowners move from SVR to better choices. If you want a fixed-rate mortgage or a tracker deal, we can help you find a way to potentially save money on your mortgage payments.
Here’s a brief list of steps you can use to take advantage of the current mortgage market:
In a changing mortgage market, choosing the best option relies on knowing your choices and thinking about your situation. Fixed-rate mortgages have gone down lately. While more cuts in rates are likely, securing a fixed-rate deal today might give you safety and big savings in the future.
If you feel unclear about what to do next, contact the team at Newhomes for expert mortgage advice. Our brokers can help you through the process and support you in making the right choice for your future. Stay updated, keep an eye on changes to the Bank of England base rate, and look for new mortgage deals actively.
