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Are rates going down?

Anya Gair
Last Updated 20 May 2024

There’s been a lot of talk about mortgage interest rates over the last few months - it’s been almost impossible to watch the news without there being some mention of mortgages, inflation or the Bank of England’s base rate. With so much noise, it can be difficult to know what exactly is going on, and which way interest rates are going. Are rates going down? How long will interest rates stay high? To set the record straight, we’ve answered all your burning questions in this helpful guide.

In this guide

  • Will interest rates go down?
  • When will rates go down?
  • How long will interest rates stay high?

Will interest rates go down?

Yes, it’s likely that interest rates will go down - in fact, mortgage rates have already been decreasing since the start of August and are expected to continue despite the recent rises. However, as the economy goes through periods of high and low inflation, interest rates will inevitably change. When inflation comes back down to a level the Bank of England deems appropriate, it will start to lower its base rate. This will have a further knock-on impact on the interest rates charged by other lenders, and should in theory result in interest rates going down even more. 

When will rates go down?

Interest rates have already peaked, and are likely to come down in the next couple of months. The average 2 year fixed mortgage rate is now 5.91%, down from 6.85% at the start of August 2023, while the average 5 year fixed rate is down from 5.48% to 5.66%. It's likely interest rates will reduce further over the coming months, as the Bank of England is likely to lower its base rate if inflation continues to reduce.


How long will interest rates stay high?

How long interest rates will stay high depends on how the economy performs. The Bank of England consecutively increased the cost of borrowing through repeated base rate rises over 2023, which has caused lenders to raise their own interest rates. Currently, the base rate is 5.25%, and interest rates are averaging 5.91% for 2 year fixed rate deals and 5.48% for 5 year fixed rate deals. But the base rate is expected to gradually come down over the next couple of months, which should mean that while interest rates could stay high until next year, they should continue to track downwards in response to the base rate decreasing.

However, it’s important to keep in mind that the ultra-low rates seen over the last few years are unusual. When you look at the last 30 years, interest rates between 4-5% are the norm, while periods of sub-4% are rare. Although interest rates are currently above 5%, once we reach levels of below 5% again then interest rates can be considered back to a “normal” level. 

If you are holding onto hope that rates will go back to the 1-3% deals seen during the pandemic before buying a home, you might be waiting a long time. Instead, consider ways to make your mortgage repayments more affordable through things like a longer mortgage term, bigger deposit, or boosting your mortgage affordability to get access to lower rates. 

Working out the best way for you to get on the ladder or remortgage to a new deal can be a minefield if you’re trying to suss it out yourself. That’s why it’s always best to get expert advice to find the best option for you. We’ve helped thousands of buyers and remortgagers discover how they could boost their mortgage affordability to buy sooner or remortgage onto a new deal.

Interest rates are accurate as of 20th May 2024. 

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