Who will prove to be correct? The hawks or the doves?

Adrian Anderson - Anderson Harris

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Published: 1st February 2024

This Article was Written by: Adrian Anderson


As predicted, the Bank of England Monetary Policy Committee has voted 6-3 to leave the base rate unchanged at 5.25% for the fourth time in a row.

There is now a real disconnect between the Bank of England’s hawkish base rate and the doveish market sentiment, which has been driving cheaper mortgage rates in recent weeks.

Current fixed-rate mortgage prices are a projection of where the markets think the future base rate will be. A string of lenders have been cutting mortgage rates since the start of the year, and this shows that the markets think we shall still see interest rate falls this year, as many have predicted.

A waiting game

That said, any road to a lower base rate may not be smooth. Whilst the UK’s growth has been and is expected to be sluggish (suggesting base rate cuts will be needed), inflation ticked up last month. This, along with current global geopolitical issues, could mean that the base rate cuts will have to wait even longer.

Margins on swap rates are also thin, leaving little space for further drops in mortgage rates. It could well be that fixed-rate mortgages currently on offer are the lowest they will be for the foreseeable future.

Pent-up demand

There does remain real pent-up homebuyer demand. We are certainly seeing our clients shift from the ‘wait and see’ sentiment of 2023 to a ‘let’s go’ attitude as they take advantage of the current lower fixed mortgage rates – but only for attractively priced properties.

We are also finding that those who selected tracker mortgage products over the last 18 months are exploring whether now is the time to switch to a fixed-rate mortgage.

Can we help?

Contact our specialists if you would like to discuss your current or future mortgage arrangements. We will take time to understand your specific financial situation and work hard to find solutions to help you going forward. Contact us on +44 (0) 20 7495 6633 or e: enquiries@andersonharris.co.uk.

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