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The base rate as set by the Bank of England is currently 3.5 percent and with inflation still high, the central Bank is expected to continue to hike the rate. This means people on variable rate mortgages will likely see their payments increase while those on fixed rate deals will avoid the payments increase.
Mark Dyason, founder of Edinburgh Mortgage Advice, said mortgage holders need to make planning ahead a “key priority” for this year.
He said: “If you need to remortgage, then get your ducks in a row six months before your current mortgage deal expires to know what mortgage products are available to you.
“You can lock in a deal six months in advance, but you are not obligated to go with that deal. Therefore, if things improve before your mortgage expires, you may be able to secure a more favourable rate.
“If things change for the worse, then count your lucky stars that you were organised and locked in a deal in advance.”
The rate of inflation peaked last year at just over 11 percent, with the current figure at 10.5 percent.
Mr Dyason spoke about when the base rate may go down. He said: “Falling inflation, especially if it heads negative as the Office for Budget Responsibility’s (OBR) report in the autumn statement said might happen in 2024, will mean the base rate will come down to tackle this.
“In the short term, falling inflation means there is no longer a need to raise the base rate, shifting the focus to GDP figures.
“If base rates come down, it’s a positive for borrowers because it will reduce their monthly mortgage payments as they will have to pay less to their lenders in borrowing costs.
“A serious cold snap could drive up gas prices, but if we avoid this, then I expect inflation to come down, especially in April when last year’s two percent rise due to fuel price increase falls off the rolling year calculation.
“The year-end Government target of six percent looks very achievable – they should have been more ambitious.”
Anthony Codling, CEO of property platform Twindig, previously told Express.co.uk he expects the base rate to rise to four or 4.5 percent and then to decrease.
He said: “We expect the Bank Rate to peak this summer and start to fall in the autumn. Our best guess is that mortgage rates will start to fall from September onwards.”
Jinesh Vohra, CEO of Sprive, also shared his thoughts on when mortgage rates will go down.
He said: “Towards the end of 2022, we saw mortgage rates rising fast. The good news is that in 2023, we’re actually starting to see things stabilise and we’re seeing hundreds of deals coming onto the market offering less than five percent – with many getting closer to four percent.
“This is partly due to change in the political landscape but also in response to signs that inflation has perhaps reached its peak.”
According to the expert, this in turn could mean interest rates will not rise as high as previously thought.
He told Express.co.uk: “In December, the Bank of England suggested interest rates were forecast to peak somewhere between 4.25 percent and 4.75 percent by the middle of 2023, but would remain around this level for the rest of 2023. If this is the case, it’s likely mortgage rates will rise a little before they begin to stabilise.”
The Bank of England is due to discuss changing the interest rate again, at the meeting of the Monetary Policy Committee, on February 2.
Mr Vohra said: “The best way to combat higher rates is to make mortgage overpayments.
“Just the equivalent of a few pounds a day could make a big difference in helping you save interest but also increases your chances of putting yourself in the best position to unlock cheaper deals when you next switch.”
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