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Could we see sub 4% mortgages before the year is out?

by LLP Finance Reporter
15th Nov 23 11:50 am

Following news that inflation fell to 4.6% in October, some brokers have said mortgage rates could start with a three before the year is out, while others agree the 4% barrier could be breached in early 2024, which will significantly boost the property market.

Ashley Thomas, director at London-based broker, Magni Finance, was confident: “I fully expect mortgage rates to reduce further in the coming days and wouldn’t be surprised to see a number of lenders offering options sub-4% before the new year.”

Kirsty Wells, director at Blueprint Mortgages & Protection, suggested that sub-4% rates could come in early 2024: “Following this extremely positive inflation data, there’s a chance we could see sub-4% mortgages by early 2024 and the Bank of England reduce the base rate by the end of the second quarter of next year.”

Justin Moy, managing director at EHF Mortgages, was also confident rates will go sub-4% before Easter next year: “The base rate will take some time to fall, as any improvements need to be consistent before Threadneedle Street considers reducing it. Towards the end of Q2 next year looks to be the consensus, and we should see a total reduction of 1% by the end of the year. This will encourage SWAP rates to fall, encouraging longer-term fixed deals to fall below 4% around Easter, if not before. It all depends on if mortgage lenders, after a subdued 2023, launch a January sale to kick 2024 off on a high.”

Ranald Mitchell, director at Norwich-based broker, Charwin Private Clients, said sub-4% rates could be widely available next year: “While today’s inflation figures are extremely positive, we will need further reductions and stabilising of inflation before we see Bank Rate reductions. These will hopefully come in the first quarter of 2024. Mortgage rates, on the other hand, continue to slowly edge downwards and if lenders continue in the same manner which we have seen over the last few months, sub-4% mortgage rates may become widely available next year.”

Craig Fish, director at London-based broker, Lodestone Mortgages & Protection, said all eyes are now on the next inflation print: “If we  see further improvements in the inflation data on 18th December, I strongly suspect that the first sub-4% fixed rate, which will no doubt be for 5 years, will surface early next year as lenders fly out of the blocks.”

But Graham Cox, founder of Bristol-based SEMH, said an election year could bring a base rate cut forward: “The pressure for the Bank of England to cut the base rate, from both the media and Government, will intensify in an election year. Despite Andrew Bailey’s caution, I expect we’ll see a cut by the Spring.”

John Choong, senior equity research analyst at Investing Reviews, said the following: “With the stickier elements of CPI in services inflation beginning to loosen up and energy prices normalising, the outlook for inflation is starting to look a little brighter. Considering the fact that approximately three quarters of the UK economy is derived from services, a slowdown in the sector could end up tipping the UK into a recession by early next year. If this comes to fruition, we can expect rate cuts from the Bank of England as soon as the second quarter, which would send mortgage rates tumbling further.”

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