Will mortgage rates continue to fall? A guide for buyers and homeowners

If you're planning to buy your first home, move house or remortgage this year, there's one question that's probably at the top of your mind: Will mortgage rates come down?

After several years of higher borrowing costs, many homeowners are hoping to see mortgage rates fall. While there are signs that the market is becoming more competitive, according to Rightmove the average two year and five year fixed rate fell to 4.9% and 4.92% respectively in mid-July. Predicting exactly where rates will go remains difficult, as they're influenced by both UK and global economic conditions. Here's what you need to know.

Why have mortgage rates been so high?

Mortgage rates are closely linked to the wider economy. Although the Bank of England's base rate plays an important role, lenders also consider factors such as inflation, swap rates (which affect the cost of borrowing money) and overall market confidence.

When inflation is high or economic uncertainty increases, mortgage rates tend to rise. When inflation begins to ease and financial markets become more stable, lenders often become more confident about reducing their mortgage rates.

Are mortgage rates starting to fall?

There are encouraging signs. Many major UK lenders have reduced the rates on their fixed-rate mortgage products in recent months, creating more competition across the market. While rates remain higher than the historic lows seen a few years ago, the overall trend has been moving gradually downwards.

However, experts continue to warn that the outlook remains uncertain. Inflation, global events and future Bank of England decisions could all influence how mortgage rates change over the coming months.

Should you wait for lower rates?

It's understandable to wonder whether waiting could help you secure a cheaper mortgage.

The reality is that trying to perfectly time the mortgage market is incredibly difficult.

If you've found the right property and a mortgage that comfortably fits your budget, securing a deal now could be the right decision. Many lenders also allow you to reserve a mortgage offer for several months, meaning you may still be able to switch to a better deal if rates improve before your purchase completes.

Rather than focusing solely on today's rates, it's often more important to consider your long-term financial goals and what you can comfortably afford.

What does this mean if you're remortgaging?

If your current fixed-rate deal is coming to an end, it's worth reviewing your options well before your mortgage reverts to the lender's standard variable rate.

Many lenders allow homeowners to secure a new mortgage several months before their existing deal expires. This can provide peace of mind if rates increase, while still allowing you to benefit if a better deal becomes available before completion.

Planning ahead can help you avoid paying more than necessary.

How can you improve your chances of securing a competitive mortgage?

While no one can control the wider economy, there are several things you can do to put yourself in a stronger position:

• Save a larger deposit to reduce your loan-to-value (LTV).
• Maintain a healthy credit score.
• Reduce outstanding debts where possible.
• Compare products from a range of lenders.
• Seek advice from a qualified mortgage adviser who can help you find the most suitable deal.

Even a small difference in your mortgage rate can make a significant saving over the lifetime of your mortgage.

Is now a good time to buy?

The answer depends far more on your personal circumstances than on trying to predict the market.

If you've found the right property, your finances are stable and the monthly repayments are affordable, waiting for the "perfect" mortgage rate could mean missing out on the right home or facing changes in property prices.

Equally, if affordability is currently stretched, taking time to strengthen your financial position may put you in a better place when you're ready to buy. 

Speak to a mortgage expert before making your next move

Whether you're buying your first home, moving house or looking to remortgage, navigating today's mortgage market can feel overwhelming. Our trusted mortgage partners are able to help you understand your borrowing options, compare deals from across the market and find a mortgage that's right for your circumstances.

The content of this blog is for general information and insight only. It does not tailor to individual circumstances and should therefore not be considered as appropriate to your specific personal circumstances.

The information in this blog post was correct at the time of publication.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.