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Mortgage Market Update – June 2024

June 6, 2024

2024 Mid-year Mortgage Market Review

The first 6 months of 2024 have seen a challenging time in the mortgage market. There was early optimism that interest rates would reduce as the year progressed, yet lenders continued to increase rates as the months ticked by while the Bank of England hold the Base Rate at 5.25%. This was largely thanks to the continued rise in cost of living and the rate of inflation not falling as quickly as was initially predicted. However, there are signs we could be on the cusp of turning a corner with brighter days to come for the second half of 2024, moving into 2025. 

Current Mortgage Deals Available

We have seen mortgage interest rates fluctuate over recent weeks. Both the lower and higher Loan to Value bracket ranges continue the recent trend of increasing incrementally month on month. The below tables highlight the outright best deals currently available on the market across varying fixed term options (rates accurate on 6th June 2024): 

50% Loan to Value deals:

Fixed TermRemortgage Interest RateNew Purchase Interest Rate
2 year4.82%4.78%
3 year4.65%4.57%
5 year4.31%4.34%

85% Loan to Value deals:

Fixed TermRemortgage Interest RateNew Purchase Interest Rate
2 year5.22%4.99%
3 year5.05%4.86%
5 year4.89%4.68%

The average Standard Variable Rate (SVR) is 8.18%, which is set by each lender at a fixed number above the Bank of England Base Rate and will apply to a mortgage once the existing fixed deal ends. With 1.5 million borrowers coming to the end of their fixed interest rate period in 2024, many will be looking to avoid moving to their lenders SVR and keeping a keen eye on the remortgage deals available on the market compared to the new deals their existing lender is willing to offer.  

Lenders are updating their interest rate ranges almost fortnightly at present, both up and down. As such the deals highlighted are subject to change and borrowers may need to act quickly to secure a deal before it is no longer available.  

Interest Rate Outlook

The outlook for the remainder of the year is fairly positive, on the back of the news the rate of inflation is continuing to slow and fall within the Government target of 2-3% (the latest figure issued was 2.3% in April).  The Bank of England will vote again on 20th June, where it is widely believed they will agree to maintain the existing Base Rate of 5.25% ahead of the General Election, but their subsequent vote on 1st August may see the first reduction of the Base Rate and potential further reductions towards the end of the year.  

The mortgage market feels like it’s in a state of flux at present, with the anticipation that interest rates will reduce and thus ignite the housing market. However, until there is more clarity with the Base Rate, many borrowers are holding off committing at this stage be it to purchase a property or simply securing a new deal on their existing mortgage. As we approach September/October, many borrowers will be coming to the end of their existing fixed deals and facing the prosect of potentially doubling their interest rates and seeing high increases to their monthly payments. We have seen earlier in the year lenders reducing their interest rates in February to as low as 3.84% for a 5 year fixed deal and we could see deals of a similar level hit the market as the year progresses. 

It is recommended these borrowers start looking into their options ahead of this and preparing themselves for what is to come and budgeting accordingly. A new deal can be secured up to 6 months before the existing deal ends, therefore a deal can be secured ahead of time to guard against any further/unexpected interest rate rises. But if a better deal then becomes available, this can also be secured at the time. This provides the best of both worlds and offers flexibility to the borrower, whilst also securing their best deal available to them.  

If you need bespoke advice contact Bigmore Mortgages and Protection today.

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