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Can we expect changes to our mortgage rates?

4 min
Neil Richardson

Neil Richardson, Dental Regional Manager from Wesleyan Financial Services, shares his insights and predictions on mortgage rate trends.

One of the things my team of dental Specialist Financial Advisers are very busy with at the moment, are client enquiries regarding mortgages. These clients are looking to gain insight into the current climate surrounding mortgages, and what the trends are likely to be in the upcoming months.

Back in early 2023 many people were financially impacted by steep hikes in monthly repayments - anyone that is now nearing the end of their current mortgage product will be looking to negotiate the best possible new deal.

What are the current trends?

Throughout the course of 2023 inflation was very high, it wasn’t until we reached the winter period that it started to come down. Inflation for December was 4% and for November, it was 3.9% - marking a slight upward tick.

This is not expected to be a long-term increase, more of a slight blip in the track, so to speak. UK CPI inflation has remained unchanged at 4% in January, which again is welcome news and offers a more hopeful outlook that the Bank of England could potentially start to cut interest rates later in the year.*

How does inflation impact mortgage rates?

If inflation continues to fall, this heightens the expectation that interest rates will also come down in the near future. The Bank of England have a target for inflation of 2% - when they see inflation hit that target, they will begin to lower interest rates.**

Tracker mortgages are massively impacted by the Bank of England base rate; therefore, we are starting to see that mortgages are effectively being forward priced, and the rates are starting to come down. This is due to where the Bank of England base rate is projected to be in the near future, rather than where it actually is now at the time of writing.

What is the outlook for the year ahead?

If we look at insights from economists and the press, the sentiment is effectively that we could start to see inflation fall further over the coming months. This could potentially mean that the Bank of England may reach their 2% target for inflation by early summer. If this happens, it’s highly likely that mortgage rate reductions will occur in response.

Therefore, the early projection for this year prior to Christmas was a possibility of perhaps four to five rate reductions across the year, potentially beginning around May, however, it may well be that due to the slight inflation uptick in December, which has held throughout January, this could be slightly delayed.

It’s also worth noting that the Bank of England may possibly be exercising caution - they may not want to bring the base rate of interest down too quickly, only to find that inflation becomes sticky.

If we assume that inflation will come down, then there would be a good chance that the banks will start to lower mortgage rates in response to this. If we do get those four or five rate decreases across the year, then towards the end of year and into early 2025, we could potentially be looking at the base rate being around 4%. This will have a significant impact on the mortgage rates that we are starting to see in the market.

Why is it so important to seek expert advice?

Despite dentistry being a traditional, respectable profession offering an average income well above the national average, some dentists may still find it difficult to take out a mortgage or to remortgage their property. This is due to the often-complex nature of a dentist’s income, which can make it harder for lenders to predict future income patterns.

Getting specialist advice, from someone who understands the dental career path, income patterns and how these can vary – for example, when a dentist changes from self-employed to limited company status and back again and so forth - can be invaluable.

If you are looking to get on the property ladder, re-mortgage or buy a second home, you can speak to a Specialist Financial Adviser at Wesleyan Financial Services as part of a no-obligation financial review.

Your mortgage is secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Wesleyan Financial Services is a broker and will be paid a fee upon completion of the loan.



* Source: Office for National Statistics
** Source: Bank of England
About the author
Neil Richardson
Neil Richardson

Dental Regional Manager at Wesleyan Financial Services

Neil is a Dental Regional Manager working exclusively with dental professionals in the West Yorkshire and East Lancashire area. He has worked in financial planning since 2001, and has worked for Wesleyan since 2008. Neil can advise on all areas of financial planning a dentist or dental business may need, and has an extensive knowledge of the NHS Pension Scheme as well as a detailed understanding of the risks and opportunities for Limited Companies and Partnerships.

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