Finally…the Bank of England voted in favour of reducing base rate to 5.00% – marking the first time rates have been cut since the global pandemic in 2020.

This will be a welcomed relief for homeowners on variable rates, but bad news for savers.

What does this mean for mortgage holders?

How close was it?

There are nine committee members who vote on rates.

Three members changed their vote from July (7-2 decision to hold) making it a narrow 5-4 decision in favour of a rate reduction.

However, the clear message was to not expect a flurry of rate cuts, with the current expectation that rates might not drop further until the end of 2024.  

Jason Harris, Senior Financial Adviser of Thameside Mortgages, welcomed this news.

“We were expecting a reduction in July or August, so it’s great to see Base Rate moving in the right direction. Dropping rates in a usually quieter month for house purchases gives confidence that September will see increased activity among purchasers and those remortgaging”.

What will happen with mortgage rates?

The market had already predicted a rate reduction in July or August and this was evident in mortgage pricing as rates started to drop, with lenders starting a price war. In July, Nationwide released a 3.99% 5 Year fixed rate, with a fee of £1,499 for customers borrowing up to 60% Loan to Value.

Hopefully, the news today will continue the downward trajectory of rates, increasing activity in the housing market.

Should I secure a mortgage now or wait?

If your mortgage deal is coming to an end in the next 4-5 months, it’s still prudent to look at your mortgage as early as possible. With lenders already fighting to be at the top of the best buy tables, there is no guarantee your existing lender will offer the best deal for you to remain with them.

Moving a mortgage to another lender can take 2-3 months in total, so if you leave it too long, you are likely to be stuck with whatever your existing lender will offer you.

By securing a deal early, it would give your broker the opportunity to reassess the market closer to the end of your fixed rate, with not only the new lender, but also your existing lender – maximising the chance of securing the best rate when your current deal expires.

---

Get in Touch

If your mortgage deal is coming to an end this year, you should secure a deal 6 months before it ends. If rates continue to rise, you’ve secured the best rate. If rates drop, you could take advantage and switch rates before completion.

Contact Thameside Mortgages today to learn more about how they can help you secure a great deal.

You can call us on 03455 120 125, or complete the form below.

A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it. The Financial Conduct Authority does not regulate most forms of buy to let mortgage.