I thought mortgage rates were coming down in 2024, what is happening?
Let’s get a misconception out of the way early about how mortgage rates have been changing…
Mortgage rates available during January 2024 were cheaper than anything else we have seen since. For example, 5-year fixes were as cheap as 3.8% approximately, whereas they are now well over 4%.
That, in itself, is sufficient to disprove the notion that ‘rates are coming down’ in 2024.
Why is this happening?
The political landscape: Mortgage rates have been wildly unpredictable for some time now. Growing unrest in the middle east, ever-shifting outlooks on inflation at home and particularly abroad in the US, have all contributed; we have seen knee jerk mortgage repricing and rates staying higher for longer than anyone had anticipated at the beginning of the year, where a new year felt like a fresh start toward normality. This year has been a mad hatters tea party; lenders have changed places (on the rates leader board) more frequently than I can recall in recent years.
Mortgage lender service levels: Other factors such as lenders becoming oversubscribed have led to price increases as a way of recovering their customer service timescales.
Swap rates: Think of this in a simplistic sense as the cost at which lender borrow their money. They need to add a bit on to make any money themselves. If these rates go up, all other pressures being equal, mortgage fixed rates need to increase too.
As of 19th April, swap rates were around 0.1% higher than they were the same day during March 2024.
You can find out more about how swap rates affect mortgages, here:
What’s the latest with mortgage rates, 2024?
NatWest, HSBC, Barclays, Bank of Ireland, Leeds and Yorkshire building societies have all announced rate increases this morning…
What can I do about this?
If you are in a position where reserving a mortgage deal would last long enough, simply, act as soon as you can.
Mortgage rates don’t just go aren’t in a straight line up or down, as the media may make it sound. They ebb and flow in response to a multitude of different pressures. Even the most seasoned of experts don’t really know if we are entering a trough or approaching a peak, over short or even long-term timescales right now. Second guessing them is, frankly, an incredibly risky and silly thing to do.
Particularly when there is absolutely no need to do so.
Mortgage rates are reserved, not committed to. Acting early simply means you have more opportunity to improve on what you have already reserved.
In any event, when we are talking about borrowing against your own home, for most people, mortgages aren’t something to bet on. They are the difference between being able to afford to stay in your home or not.
Please get advice as far in advance as reasonably possible, and consider every solution and back-up plan you can.
