January 5th, 2024
Happy New Year! 2024 is in full swing, and the mortgage market is experiencing a wave of decreasing rates, further fuelled by recent moves from major lenders like HSBC and Halifax. This as well as an update to the UK base rate are covered below.
Competitive Rates Landscape:
HSBC have made a statement with their five-year fix at 3.94%, making them the first major lender to release a rate less than 4% in over a year. The rate cut sets the stage for a continued battle among lenders, and CMME Mortgages is well-positioned to provide competitive offerings to its clients.
As well as HSBC Halifax, the largest mortgage lender in Britain, is following suit with reductions of its own.
One notable change is the two-year fixed-rate remortgage, which has decreased from 5.64% to 4.81% this week.
No Movement on UK Base Rate:
Despite the excitement around falling mortgage rates, the UK base rate remains steady at 5.25%, mirroring what we reported at the start of November. This is the third straight time the base rate has remained at this percentage.
The MPC’s decision to keep the rate unchanged was driven by the goal of curbing inflation, which currently stands at 4.6%.
While inflation has shown signs of cooling from its peak, it remains double the target of 2%. See our article from November 2023 on what a lowered inflation rates means for the UK property market moving forward, as well as insight for CMME clients, Buy-To-Let mortgage holders and first-time buyers.
The Bank’s commitment to restrictive monetary policy aims to bring inflation sustainably back to the 2% target in the medium term. The next base rate review is due on 1st February 2024.
Market and Housing Trends:
Research from Moneyfacts reveals a decline in the average two-year fixed-rate residential mortgage rate in the UK from 6.29% two months ago to the current 5.87%. The average five-year fixed rate has also seen a decrease from 5.87% to 5.53%.
Despite initial concerns, the UK housing market has displayed resilience, with house prices only experiencing a 1.8% decline in the year to December, according to Nationwide. Mortgage approvals in November reached the highest level since June, as reported by the Bank of England.
How This Affects CMME Clients:
For CMME clients with variable-rate mortgages linked to the base rate, the freeze is positive news, ensuring that their mortgage bills will remain unchanged for the foreseeable future.
Additionally, those approaching the end of fixed-rate mortgages may find solace in the stability, with hopes that mortgage rates might decrease before they make a decision regarding their remortgage.
The decision to maintain the base rate provides a stable backdrop for mortgage holders, allowing for a potential continuation of the recent trend of rate drops.
Since the last base rate decision in November, mortgage rates have already seen a decline. For instance, the average two-year fix dropped from 6.86% last July to 5.87%. Furthermore, the average five-year fix decreased from 5.87% to 5.58%.
Kevin Kiley, Senior Mortgage Advisor for CMME, commented the following:
Our 2023 round up spoke of significant economic shifts, and an optimistic landscape for 2024. The competitive rates by lenders and stabilisation of the base rate does in fact offer encouraging data to work with, as we move on from a tumultuous 2023 in the mortgage market.
With a commitment to providing competitive options and a strategic approach in line with market dynamics, CMME remains a key player in the evolving mortgage landscape.
As borrowers explore opportunities amidst changing rates, CMME continues to be a reliable partner, offering tailored solutions to meet diverse mortgage needs. A FREE no obligation call with one of our brokers is just a click away if you require any further information tailored to your individual financial situation.