How could interest rates affect your mortgage?

February 22, 2024

If you’ve heard the news about the Bank of England’s Base Rate and have plans to buy a home, you might wonder how this will affect you.

With mortgage lenders changing interest rates and a flurry of reports about The Bank of England’s Base Rate, you might be wondering what action to take.

On February 1st, The Bank of England announced a hold on interest rates for the fourth time in a row, at 5.25%. This action suggests The Bank of England has inflation more under control, so it’s positive news for households and businesses.

So, how does this affect you as a homebuyer? Firstly, if you secure a fixed-rate mortgage, then when you’re within the fixed rate period, the rates are the same. By keeping your mortgage costs steady, you can plan your finances with more confidence.

What’s more, with general mortgage rates decreasing in the last quarter of 2023 and January this year, the outlook is appealing for homebuyers.

According to property portal Rightmove, right now, the average fixed rate mortgage rate is 5.03% for two years and 4.69% for five, with the lowest two-year fixed rate 4.2%, and the lowest five-year fixed rate 3.94%. Compared to July last year there’s a significant improvement, when the average two-year fixed rate mortgage was 6.61%, and the average five-year fixed rate mortgage was 6.08%.

With all this in mind, if you’re a first-time buyer, this could be a great time to step onto the property ladder. You may already be budgeting to decide what value property you can buy, considering the deposit and monthly mortgage repayments. With such a range of mortgages available, it’s good to ensure that you get the best possible deal, and secure a mortgage that fits your needs.

If you’d like to find out what’s affordable for you, our trusted independent advisors can offer advice. We’d be happy to put you in touch for an informal chat, so let us know if you’d like us to.


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