Lenders start reducing mortgage interest rates – good news at last?

After a torrid 18 months, some good news at last for landlords and homeowners with mortgages.  

This week, Halifax and HSBC started reducing the interest rates of their fixed term mortgage deals, with commentators anticipating this will kickstart rates readjusting across the market. So what more could 2024 hold? 

Just before Christmas, the Office for National Statistics confirmed that inflation was lower than expected in November, falling from 4.6 per cent to 3.9 per cent. This raised hopes that the Bank of England will act to cut interest rates. 

Inflation peaked at 11.1 per cent in October 2022, but remains above the Bank’s target of two percent.  

However the Bank has kept its base rate steady at 5.25 per cent since August last year, following 14 rate increases beginning in December 2021. 

Base rate cut?

Experts are now predicting that the Bank’s base rate will be cut in the first half of 2024 – much earlier than previously thought. 

Lenders are anticipating the cut. But they’re also competing for business in a slow-moving housing market, and starting to offer deals to those looking to remortgage. 

While the media coverage has focused on homeowners, buy to let mortgages have been following suit. It’s been reported in the trade press that some specialist lenders are beginning to offer sub-5 – and even sub-4 – per cent deals. 

All speculation, of course, but it does seem the Prime Minister is banking on a more positive 2024 financially, to bolster the Government’s chances in a general election in the latter part of the year. 

However, they are also keeping their options very much open – Rishi Sunak didn’t rule out a May election, either. 

It seems the rollercoaster of the past year and a half has encouraged everyone to hedge their bets. 

Meera Chindooroy Deputy Director of Campaigns, Public Affairs & Policy

Meera is Deputy Director of Campaigns, Public Affairs & Policy at the NRLA. She joined the National Landlords Association (NLA) in May 2018, having previously worked in both policy development and project management for a range of not-for-profit and public sector organisations. Meera provides political insight both internally and for NRLA members, and lobbies in their best interests. Meera has extensive experience of building partnerships with stakeholders across communities, civil society and government, as well as developing collaborative approaches to policy challenges.

Prior to joining to the NLA, Meera provided policy and engagement support to the chief executive of the Big Lottery Fund, the UK’s biggest community funder. She also developed strategic policy at the General Medical Council, the regulator of doctors in the UK.

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