Mortgage Predictions for 2024

Sarah Thompson , Managing Director at Mortgage Scout (part of LRG)

In 2024, we can expect mortgage rates to largely mirror this year's trends, with no significant reductions foreseen, small reductions are likely to happen in 2025. While some economists predict a decline in rates to 3.5% by 2027, I expect to start seeing reductions in 2025.

The market has now largely adapted to the current mortgage rates, and as a result I anticipate an increase in property movements in the first and second quarters of 2024. Further advances on current mortgages for renovations remain a viable option.

Any further drop in these rates hinges on the interplay between inflation dynamics and the confidence levels of banks and building societies. The competitive drive among lenders to meet their financial goals this year is evident.

Borrowers with larger deposits are continuing to achieve more favourable interest rates. Different lenders vary in their stress test approaches, affecting the amount they're willing to lend. Brokers, with their detailed knowledge of fees, stress tests, and deposit requirements, will play a crucial role in navigating the subtle changes expected in 2024 to ensure borrowers get the best deal possible. It's important to remember that inflation is not the sole factor influencing interest rate movements.

The choice between 2-year and 5-year fixed mortgage rates has been influenced by recent trends and risk tolerance, with the latter being preferred by less risk-averse borrowers. As we move into 2024, I expect this trend to continue particularly with the varying predictions we are still seeing on where mortgage rates will move to.