Buying house - mortgage expires Dec 23 - will mortgage rates come down before then

[DancingQueen2019]

So we have secured £145k extra borrowing at a rate of 5.05% for 2 years, we are porting approx £140k at a rate of 1.89% to finish next October/November 2024.

My broker has advised to secure the mortgage and should rates go lower, we could pop onto a new rate. The mortgage offer expires in December 2023 so some time away.

Obviously have seen the news of potentially rising Bank of England rate on 22nd June, and increasing of mortgage rates to now 6%.

Am I to take it that mortgage rates are more than likely going to stay where they are/increase more, and that there's not much point in hanging around and may as well complete as soon as possible. (ie and not hang around to wait for potential drop in interest rate).

What are peoples thoughts please.

Yep, no interest rates drops coming for a few years.

I bet that it will stabilise around 5% BOE base rate so maybe upto 7% average mortgage rate and be like that for a few years before slowly coming down a little.

That would still be lower than the historical average as the average BOE base rate is 7%.

I’d be fixing for 5 years myself just in case of a protracted series of rises (they keep revising it upwards don’t they?).

The mortgage offer has already been issued a couple of weeks ago - I suspect I cannot change from 2 year to 5 year fix?

I'm hoping it will have all "blown over" by August 2025...or at least stabilized (I say optimistically)

Not a hope in hell of them coming down. However, what your broker failed to explain is this: lenders tend to put a really big cushion in their finances for mortgage rates linked with bank of England interest rate rises, and what seems to happen every single time (now bi-monthly) is that, about 2-4 weeks after a BoE rise, lenders say 'well, that wasn't as bad as our worse case scenario, it wasn't 0.5/0.75%, so we can now lower them back down a bit so people can afford to buy.'

That is what he will be referring to re: if they fall in between two interest rate rises.

The reason we have seen such awful rises in the last 3 weeks (up to 1.4% over two withdrawals and reinstatements, which is massive) is because most economists are expecting a 0.5% rise on Thursday, some particularly cynical ones 0.75%.

So, yes, rates may partially come down slowly after Thursday, but this whole cycle will start again 3 weeks in advance of the next BoE review, which will be around 22nd August-ish.

When you have an application in and they lower rates after whatever the BoE does, most lenders automatically lower your mortgage in line with what they are now offering customers who had not already applied.

I hope that makes some sense.

@KievLoverTwo Understood , thank you !
My conversations with my broker were some 3/4 weeks ago so alot has changed even in that small time.

Basically if my hopes are based on securing a rate of say 4.5% - thats long gone I suppose!!

That depends on whether he got a decision in principle for you from the lender. Those should come with a time period at the rate offered to you back then.

If he didn't, it's unlikely I am afraid.

@KievLoverTwo that's fine, I'm confident he got me the best rate available at the time : )
i know that at the end of the day if rates don't come down then my 5.05% is very generous compared to the nightmare other people are having.

Rates definitely wont have come down by December 2023

Agreed. It wouldn't surprise me if averages exceed 7% before the end of the year.

I do wish brokers would make themselves clearer, but they are doing a v difficult job at the moment, with all the rates rises and lenders withdrawing products with 4 hours notice, it's a frantic and horrible job to do right now.

No they won't come down lower than the rate you have been offered and could easily rise higher.

@rainingsnoring that's exactly my question - thank you!

Although I've just read in the news that gilt yields have plunged after Hunt announced no support for mortgage holders. So that's good news. I strongly suspect it will be temporary but we will have to wait and see!