Sarah Coles, the head of personal finance at Hargreaves Lansdown, shared the consensus prediction regarding the trajectory of mortgages.
She explained: “Mortgage rates have fallen slightly from a recent peak for the average two-year rate of 6.85 percent at the start of August to 6.34 percent.
“However, they’re still a long way above the levels we saw in the spring – let alone the sub-two percent rates so many people on fixed-rate mortgages have come to rely on.
“The expectation that rates will hold for a considerable period may see mortgage rates come down slightly further.”
As it stands, the Bank of England’s base rate is sitting at 5.25 percent and is forecast to remain at this level following this week’s unemployment figures.
While mortgage rates are likely to drop due to this, earlier this week Lloyds warned that house prices are not set to fall until 2025.
The finance expert cited that homebuyers could get a “bargain” if they settle for a fixed deal and mortgage rates end up rising once again.
Ms Coles added: “If the uncertainty is enough of a concern, they might prefer to lock in a fixed rate deal now – up to six months before the remortgage is due. If rates fall from here, they can ditch the deal and shop around.
“However, if there are any nasty surprises that push rates up again, they’ve secured a fixed rate bargain.
“The question of how long to fix for is thorny. Longer-term fixes are cheaper, but if someone opted for a two-year fix, there’s a reasonable chance rates would be lower when they came to remortgage.
“The decision will come down to whether their priority is the cheapest possible fix today, or whether they’re prepared to pay more today in the hope of a cheaper deal later.”
