For the second time this year, the Bank of England’s Monetary Policy Committee (MPC) voted to reduce the standard base interest rate by 0.25% to 4.75%. The previous 5.0% base rate was from the first majority vote by the MPC to reduce the base rate of 5.25% to 5.0%. The reduction decision came in August, remained steady through September and with no scheduled meeting in October stayed at 5.0%. The two rate cuts for 2024 are a welcomed decision for borrowers as there had not been a reduction to the base rate since March 2020 when the MPC voted an historical low of 0.1% during the pandemic.

The vote by the MPC on Thursday was highly expected as the inflation report released last month revealed inflation had fallen below the target rate of 2.0% from 2.2% to 1.7%. The nine member committee voted eight to one for the cut with one voting to keep the rate steady at 5.0%.

It has been 18 months since the rate has been below 5.0%. However, lenders have not been enthusiastically dropping their mortgage and remortgage rates after the decision of the MPC. They didn’t need to do so since offered rates have already been below the base rate for weeks. Before the first base rate cut in August, lenders offered up attractive deals to borrowers and continued to do so after the MPC reduced the rate. In the past few weeks, some lenders have been edging up their interest rate offers on mortgages, while some remortgages have come onto the lending market with lower rates.

Remortgage rates had been running behind the offers of mortgages, so it could be considered a bit of catching up for homeowners to the better deals that have already been available for home buyers. 

In researching the average interests rate among top lenders, as of Friday, the average interest rate for a two-year fixed rate mortgage was 4.54%, with the average for a three-year fixed was at 4.39%, and 4.26% for a five-year fixed deal. This, according to Better.co.uk, reveals that borrowing is possible below the base rate and much cheaper than at the start of the year.

Across all offers, the best two-year fixed rate deal is slightly below 4.0% at 3.96%, while the three-year fix and five-year fix are 3.92% and 3.74%, respectively.

Trackers are less likely to appeal to borrowers with the best two-year mortgage rate at 5.50%. However, because the base rate is expected to reduce further next year it could be a good choice, for while the fixed rate locks in the interest rate, the tracker will follow the decisions of the MPC in 2025.

The available offers will vary for borrowers according to lender and other factors such as the level of deposit offered from the home buyers. For homeowners, the offers available in remortgages can vary as their loan to value or LTV is impacted by increases in property values. This can be helped along when the housing market has strong demand in the homeowner’s location. 

The forecast for the final months of the year and throughout the next year is for demand to increase in the housing market and end 2025 with growth reflective of the changes in the market such as lower interest rates and an increase in supply of listed properties for sale. There is a boost to the market expected from now through the first quarter when the stamp duty adjustment of the nil rate returns to previous values. 

The levels at which a home buyer would have to pay stamp duty were raised with the intention for it to be lowered again after 31 March. To avoid paying more and to save money, it is expected home buyers will complete their purchases by the deadline. The boost in sales will then likely later reveal a correction to lower demand, and while the average house price might show some setback it will be understood as expected and not a cause for worry. Meanwhile, many homeowners will benefit from the higher demand and rising house prices as their property values will climb and the LTV will lower bringing them the ability to see better remortgage interest rates from lenders.

Experts encourage homeowners to find savings by shopping for a remortgage online. 

There are many homeowners that have already come to the end of their mortgage term and others poised to do so in the coming months. Without a remortgage, the debt will be transitioned by the lender to their own standard variable rate or SVR. Avoiding the risky and costlier SVR is encouraged, for while the average fixed rate remortgage is likely to be reflective of the current mortgage rates of below base rate, the average SVR is slightly above 7.5%.

Taking the advice of experts, homeowners could quickly and easily gather remortgage quotes from a variety of lenders by visiting a remortgage broker website online. In a matter of minutes, the possible savings could be revealed and the process to keep more in the family budget could begin.