When will mortgage rates come down?

When will mortgage rates come down?

Mortgage Rates

When will mortgage rates come down?

It’s the question everyone wants an answer to. It’s also one of the main factors that has stalled house moves over the last couple of years, impacting house prices, house moves and general confidence in the market.

Mortgage rates peaked in 2023 following rises in the base rate to tackle rising inflation and then the September 2022 mini-budget when interest rates began to soar even faster. As a result mortgage rates hit more than 6% in July 2023, three times their December 2021 levels.

At the beginning of 2024 they began to drop as hopes of interest rate cuts grew with anticipation that we could then see mortgage rate cuts following suit. Lenders were also trying to attract new borrowers and be more competitive with rates below 4% on offer at one point.

Expectations were even higher as inflation began to fall. However, the drop in mortgage rates was short-lived. Rates began to creep up again in February and have remained volatile since.

The current situation

In mid to late April rates rose again.  Lenders including HSBC, Barclays and NatWest raised their rates by up to 0.4 percentage points.  April saw the Bank of England base rate held at 5.25% for yet another month – the sixth time in a row. This was despite inflation continuing to fall, down from 3.4% in February to 3.2% in March.

Looking ahead

The more recent rises have come as predictions on interest rate cuts have been revised. Where six or seven base rate cuts had been predicted this year, the predictions are now for just two or three. The first base cut, which was widely expected in June after forecasts from Capital Economics that it would fall to around 3% by the end of 2025, is now likely to land in August.

Swap rates, which determine fixed rate mortgage prices, have risen as a result since the start of the year up from 4.04% to 4.66% for two-year swaps and 3.4% to 4.11% for five-year swaps.

So what does that mean for the future?

Mortgage rates are volatile.  There is no crystal ball that will reveal for sure when they will begin to fall. You may have heard the news of falling rates earlier in the year and begun planning your move. Now you might be wondering whether to choose to wait and ride out the market.  Or, whether to move while supply is more restricted and there may therefore be greater demand for properties that have been well-maintained and presented accordingly.

The later prospects of interest rate cuts isn’t great news. However, it will be a stimulus that will prompt the market into moving fast when it does. Mortgage rates will have to come down at some point. As we know, it’s just a case of when the market and lenders are confident to do so.

Rate Cuts

When more dramatic cuts do begin to happen – especially when we start to see the base rate cut – then we are likely to see the market snowball. Ensuring you and your property are ready for your next move will be key.

Here at Callaways Estate Agents, we will do all we can to help you complete a smooth house sale. We operate across the South Coast, including in Falmer, Worthing and Brighton & Hove. We have the experience and knowhow of the local area to help you set the right price and attract the best kind of buyers.

For more info about what we can offer, please get in touch with us today. Your free, instant online valuation of your home awaits by clicking here.