Will Mortgage Interest Rates Go Down In 2023 in the UK?

Estimated reading time 6 minutes

On 21 September 2023 the Bank of England surprised the market by keeping interest rates on hold at 5.25%.  It is the first time since November 2021 that they haven’t raised rates, they did however leave door open for further rises in the future, promising to “take the decisions necessary” to return inflation to 2%.  The Chancellor of the Exchequer expressed his optimism about the “tide turning against high inflation.”

What does this mean for mortgage interest rates in 2023?

If you are one of the 800,000 UK households that are facing the possibility of higher interest rates when your fixed rate mortgages come to end in the later part of 2023 or one of the further 1.6 million that are going to face the end of your fixed rate mortgage in 2024 you no doubt will be watching news on any new fixed rate deals that lenders are offering.

Newspaper headlines today are informing us that some lenders are now offering new five-year fixed rates below 5% and a number of others have reduced their borrowing rates.

The fact that five-year fixed rates deals have lower interest rates than two year fixed rate deals suggests that the market is expecting rates to stabilise, but this is a prediction not a given.

Will mortgage interest rates keep falling?

Continuing along the current trajectory mortgage rates are likely to stabilise around here as the vote was 5:4 to keep rates on hold. Do note that the vote on interest rates could easily switch the other way next time the monetary policy committee meet especially if next month’s inflation numbers were to rise.

What is encouraging for homeowners coming out of fixed rate mortgages is that a growing number of economists and predicting that we have now arrived at or are very close to the peak of interest rates and as such if the cost of borrowing remains steady or decreases it could lead to lower mortgage rates.

But interest rates have soared since December 2021 when the base rate was at 0.1%, now with the base rate at 5.25% even with mortgage rates falling it is easy to understand why if you are approaching the end of your current fixed rate mortgage you could be anxious. Even if interest rates do not rise any further the mortgage deals that are now on offer are at higher interest rates than the rate you had previously locked in.

Back in 2021 you could get a 2year fixed rate deal at 0.89% the average 2yr fixed rate deal now is 6.56%.

So even if interest rates are peaking mortgage rates are still a long way off from where most will have fixed, which is why the government introduce the Mortgage Charter.

Worried about affordability?

If you are worried about your monthly mortgage payments reaching unaffordable levels you are not alone as monthly mortgage repayments for an average semi-detached house in the UK has increased by 61% as of December 2022.

If you have a had mortgage for more than two years your rates will increase when you re-mortgage here are a couple of options to consider.

  1. Lock in a New Rate Early – If you are coming to the end of your fixed rate mortgage you will be able to lock in a new deal up to six months ahead of your current mortgage expiring and you won’t have to pay early repayment charges. Also, if rates do happen to fall before your deal ends you can switch to the better deal right up until the new deal starts.
  2. Fixing your Mortgage – If you are on a variable rate and worried that rates may rise further you can fix for a set period. It may be more expensive to begin with but will give you peace of mind that you won’t have to pay more over that set period.

Help, I can’t pay my mortgage

Don’t struggle in silence the first thing you must do is contact your lender. Your lender will discuss your options and offer suggestions on how to help you meet repayments. Lenders have signed up to the Government’s Mortgage Charter which means help is at hand.

  • Contact your lender for help and guidance knowing that it will not impact your credit score.
  • If you’re up to date with payments, lenders can let you switch to interest-only payments for six months to help you get back on track with your finances.
  • You can extend their mortgage term reducing their monthly payments with the option to switch back to the original term within 6 months of contacting the lender.
  • If you’re approaching the end of a fixed rate deal, you will have the chance to lock in a new deal 6 months ahead.
  • If you’re up to date with payments, you can switch to new mortgage deals.
  • You can access tailored support from your lender if you’re struggling with payments.
  • Homeowners on low incomes can apply for Support for Mortgage Interest a government scheme that helps towards interest payments.

If mortgage rates are going down are you have put in place household budget cuts and spoken to your lender but your property is just too expensive for you to run you could let your home out and rent somewhere more affordable, but you would need to speak to your lender about switching your mortgage to a buy-to-let mortgage.

Alternatively, if you are concerned with the uncertainty surrounding the direction of mortgage rates. are looking at downsizing or relocating to a less expensive area Gaffsy offers a fast, hassle-free transparent way to sell your home.

Gaffsy a leading cash house buyer will buy any house regardless of the condition or history. If you need to sell your flat fast and time is of the essence, rest assured Gaffsy can guarantee you that quick house sale, by using our available funds we can complete on your home in as little as 7 days.

While the future of mortgage interest rates in 2023 and beyond remains uncertain taking proactive measure to stay informed about market trends, engaging with your lender in accordance with the Mortgage Charter and considering alternatives like selling to Gaffsy you will be in a good position to make the best decision for your circumstances. If you do decide you want to sell your property fast and with zero fees, contact us today for a free cash offer from us today.

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