Lenders say demand for homes has been growing in recent months. “I think that will encourage more activity as the year progresses.” “Rates are already much better than they were in the summer, and there is still competition driving that,” Hollingworth says. For example, the average two-year fixed rate at 95% LTV (that is, for someone who can only raise a 5% deposit) stood at 6.21% on 21 December – down from 7.1% in August. “I think we could see lenders come out swinging to get off to a good start,” he adds.Īs things currently stand, homebuyers with small deposits will find that average rates are now down “considerably” from just a few months ago, according to the data provider Moneyfacts. The move by Gen H should set the tone for more cuts in the new year, assuming money market swap rates – which largely determine the pricing of new fixed deals – remain at current levels, Hollingworth says. Launched by a small lender called Gen H, it has a rate of 3.99%, is for loans up to 60% loan-to-value (LTV) and carries a £999 fee. The drop fuelled money market expectations that the Bank of England could cut interest rates as early as spring 2024, and already a five-year fixed-rate mortgage deal priced at below 4% is on sale for the first time since May. It has been a tough year for many homebuyers and those looking to remortgage, but a bigger-than-expected drop in UK inflation in November has intensified the downwards pressure on the cost of borrowing. The new year “could start with a bang” on the mortgage front, says David Hollingworth from the broker firm L&C Mortgages. But in the meantime, what can you expect from mortgage rates and the housing market? We asked some experts for their forecasts.
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