Understanding mortgage interest rates and forecast for 2024
Mortgage rates have been a hot topic in the UK for a long time now and have impacted the housing market dramatically. Last July, mortgage rates for two-year fixed terms reached their highest level since 2008 when they hit 6.66%, making buying a house even more expensive.
This has made the housing market tricky to navigate throughout 2023, but will that continue in 2024? Whether you’re completely new to mortgage interest rates or you want a forecast of what to expect in the future, our guide may be able to help.
We’ll take a look at how mortgage interest rates work, how you can get better rates and what the future may look like. Continue reading to find out more and grow your mortgage rate knowledge today.
How does mortgage interest work?
When buying a house, you’ll typically need to take out a loan. This is known as a mortgage and as with most loans, you’ll pay interest on top of your repayments. So, whatever you borrow will have an interest rate attached to it, which will be paid back monthly over an agreed period.
Mortgage interest rates vary depending on the deal you agree with the lender. You’ll usually have two choices, fixed or variable. Fixed mortgage rates stay the same for an agreed amount of time and the longer you fix for, the better the rate will be. Or, choose a variable and the interest rate will change with the market rate. A variable is slightly riskier as you may pay more than the fixed, but there’s also a chance your monthly costs can be lower.
How can I get better rates?
Interest rates aren’t the same for everyone and there are plenty of ways to improve the one you’re offered. Some of the easiest ways to get a better mortgage interest rate include:
- Improving your credit score
- Having stable employment and income
- Investing a bigger deposit
- Speaking to a mortgage advisor, who has access to products from a number of different lenders
- Adding more people to the mortgage application
Mortgage interest forecast
If you’re buying a house in 2024, you may be wondering what mortgage interest rates will look like over the next 12 months. Some experts believe mortgage rates could reduce drastically in 2024 and could be slightly under 4%.
This is likely to happen in the second half of the year, however, so it may be beneficial to wait before you start your house hunt. As ever, though, the housing market and mortgage rates can change at the drop of a hat. That’s why buying your home should be done at a time that suits you, so assess your options and complete a purchase when you’re ready.
