Mortgages fell ahead of the Bank of England’s (BoE) decision to keep interest rates at 5.25 percent, following forecasts rates could fall below 4 percent by 2024.
HSBC cut mortgage rates on a range of home and buy-to-let mortgages on Thursday, while Virgin Money also announced a new wave of cuts.
The central bank announced that interest rates will remain unchanged for the third day in a row, remaining at the current level of 5.25 percent.
However, markets expect the Bank of England’s key interest rate could be cut to 4.25 percent by the end of 2024, with some forecasting an even sharper cut next year.
Over the past two years, the Bank’s Monetary Policy Committee has raised the key interest rate in fourteen consecutive steps from 0.1 percent to the current level of 5.25 percent.
The Bank of England tried to curb inflation and bring it closer to its target of 2 percent.
Inflation was 4.6 percent in October, slower than the rise in September and below its peak of 11.1 percent in October 2022.
Nick Mendez, technical manager for mortgages at John Charcol, said lenders had launched a “price war” earlier than expected and forecast interest rates could fall below 4 percent by 2024.
“At the start of the year we should see more lenders issuing five-year fixed rates below 4.5 percent, with bargain buys approaching 4 percent and two- and three-year fixed rates also rising to 4.5 percent falling.” ” He said I.
“Expectations for growth of less than 4 percent are emerging from spring to mid-2024 as markets continue to price bank interest rates down in the coming years. Personally, I expect bank rates to cut in August and possibly November, although this depends on core inflation figures for 2024.
“Depending on the level of inflation and the broader economic and political situation, in the second half of next year we may see the five-year fixed rate be the first to see interest rates below 3.5 percent, while two- and three-year interest rates rates will be below 3.5 percent. fixed rates will see rates below 3.5 percent, followed by interest. Passing the 4 percent mark.”
Mortgage holders whose fixed rates expire in 2024 will find market conditions “a little more favorable and less volatile” than those expiring this year, he added.
Fixed-rate borrowers can try to negotiate a new contract with another lender six months before the fixed-rate end date, he added.
Brokers believe lenders’ interest rate cuts could be linked to weak gross domestic product (GDP) data released today.
The British economy contracted unexpectedly, falling 0.3 percent between September and October, according to the Office for National Statistics.
From Thursday, the five-year mortgage with a loan-to-value (LTV) ratio of 4.49 per cent and a term of 60 per cent will be reduced by 0.05 per cent for existing HSBC retail customers who switch to it.
Three-year LTV of 70 or 75 percent will be reduced by 0.3 percent, and two-year LTV of 70 or 75 percent will be reduced by 0.25 percent from 4.75 percent, with all affected plans subject to a product fee of £999.00.
For refinanced mortgages, the five-year LTV of 65 percent will be reduced by 0.2 percent from 4.54 percent and the two-year LTV of 75 percent will be reduced by 0.3 percent from 4.94 percent, for an overall Product Fee of £999 all rates.
For Virgin Money customers, fixed LTV rates of 85 per cent and 90 per cent for two and five years with a fee of £1,295 will be reduced by 0.10 per cent, starting from 4.58 per cent.
And 85% and 90% LTV rates on two- and five-year fixed rates drop to 0.12%, starting from 4.74%.
For Virgin Money refinance customers, the two-year fixed rate with an LTV of 60 percent and a 1 percent fee will be reduced by 0.2 percent to 4.59 percent, and the LTV with a fixed rate of 70 percent and a fixed interest rate of one year will be reduced. by 0.2 percent to 4.59 percent, with the one percent interest rate reduced by 0.2 percent to 4.59 percent. percent, the remuneration is reduced by 0.20 percent to 4.69 percent.
Meanwhile, two- and five-year purchase and lease prices will be reduced by 0.05 per cent with a grant of £2,195, starting at 4.59 per cent.
The five-year fixed interest rate of one percent will be reduced to 0.32 percent, down from 4.74 percent.
Two-year fixed interest rates of 3 percent will be reduced by 0.15 percent from 4.52 percent, and five-year fixed interest rates of 3 percent will be reduced by 0.22 percent from 4.44 percent.
Source: I News
I am Moises Cosgrove and I work for a news website as an author. I specialize in the market section, writing stories about the latest developments in the world of finance and economics. My articles are read by people from all walks of life, from investors to analysts, to everyday citizens looking for insight into how news will affect their finances.