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Why Are Mortgage Rates Rising Despite Base Rate Cuts?
- Daniel Campbell
- Nov 27, 2024
- 3 min read
The mortgage market has taken a surprising turn in late 2024. Despite the Bank of England cutting the base rate from 5% to 4.75%, mortgage rates are climbing again. High-street lenders have reversed their recent rate cuts, and sub-4% deals are no longer available.
If you're wondering why this is happening—and what it means for you—keep reading.
Why Are Mortgage Rates Rising After a Base Rate Cut?
Mortgage lenders don’t base their rates solely on the current Bank of England base rate. Instead, they set rates based on long-term market expectations about interest rates, inflation, and economic stability. Recent events have reshaped these expectations:
1. Market Expectations Before and After the Autumn Budget 2024
Before the Budget: Markets anticipated regular rate cuts throughout 2025, reflecting optimism about economic recovery.
After the Budget: Concerns about persistent inflation shifted expectations. Markets now foresee fewer or slower rate cuts, keeping long-term borrowing costs elevated.
2. Inflation’s Unexpected Rise
In October 2024, inflation rose unexpectedly, making a December base rate cut less likely. This uncertainty has rippled through the lending market, causing banks and lenders to raise their mortgage rates to manage risk.
Latest UK Mortgage Rates (as of 20th November 2024)
According to Rightmove, these are the latest average mortgage rates in the UK:
2-Year Fixed Mortgage (60% LTV): 4.38%
5-Year Fixed Mortgage (60% LTV): 4.31%
Standard Variable Rate (SVR): 7.99%
These rates highlight the importance of locking in a deal before rates rise further.
What Should You Do?
Whether you're a current homeowner, first-time buyer, or looking to move, now is the time to act. Here's what you can do:
If Your Mortgage Deal Is Ending
Act Early: If your deal ends in the next 6 months, start exploring options now.
We Can Help: At More Financial, we search through thousands of mortgage products and exclusive deals from high-street banks to secure the best rate for you.
Rate Watch Guarantee: If rates drop before your deal is completed, we’ll adjust your mortgage to secure the lower rate*—helping you save even more.
For First-Time Buyers
Lock In Early: Mortgage rates may rise further, so securing a deal now could save you money.
Boost Your Chances:
Save with a Lifetime ISA to maximize your deposit.
Improve your credit score and budget wisely to strengthen your application.
Free Consultation: Book a no-obligation appointment with us to understand your borrowing options.
If You're Buying a Home
Lock Your Rate: Once you've agreed on a purchase, secure a rate to stabilize your monthly payments.
Plan Wisely: Avoid overstretching your budget, as higher rates can limit borrowing power.
Key Insights for Mortgage Shoppers
Stay Ahead of Changes: Mortgage rates can fluctuate quickly, so working with a broker ensures you stay informed.
Consider Fixing Your Rate: Fixed-rate mortgages offer stability in uncertain markets, protecting you from potential future hikes.
Shop Around: Lenders’ rates can vary widely, so don’t settle for the first offer.
Why Choose More Financial?
With years of experience navigating the mortgage market, More Financial Mortgage & Insurance Brokers is here to make the process simple and stress-free. We offer:
Expert advice tailored to your situation.
Access to exclusive mortgage deals not available directly to consumers.
A commitment to finding the best rate for you, even as markets change.
Final Thoughts
The mortgage market is unpredictable, but preparation and expert guidance can help you navigate these changes. Whether you're looking to remortgage, buy your first home, or move up the property ladder, now is the time to act.
Don’t wait—contact More Financial for a free, no-obligation consultation and let us help you secure the best deal.
*Disclaimer: If a lower rate becomes available before completion, we will adjust your deal subject to lender terms and conditions.
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