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Mortgage rates continue to fall as the average rate hits a near seven-month low

Updated 05 January 2024

2min read

Lisa-Marie Voneshen

Mortgage rates are continuing on a downward trajectory as we enter 2024.  

Many major lenders, including TSB, HSBC, Halifax and first direct, have kicked off the new year by cutting rates – with HSBC now offering a five-year fixed-rate deal of 3.94%.  

However, this offers little comfort as UK households are facing an eye-watering £19 billion rise in mortgage costs, according to Goldman Sachs.  

House prices rose for the third consecutive month in December to an average of £287,105, according to Halifax’s house price index, while the Bank of England (BoE) recently revealed mortgage approvals increased in November to 50,100. 

For those with mortgages, millions of fixed-rate mortgage deals expire this year, so homeowners must remortgage at a higher rate than before or move onto the standard variable rate (SVR), which is currently, on average, around 8%.  

In a spot of good news for those remortgaging or planning to buy a new home, the average mortgage rate has fallen to its lowest in nearly seven months at 5.87%, according to Moneyfacts. 

Despite mortgage rates decreasing from a peak of around 6.8% in July 2023, anyone planning to get a new mortgage this year will face higher monthly costs compared to their current deal. 

Will mortgage rates fall further in 2024? 

Following TSB, HSBC, Halifax and first direct’s lead, other major lenders are expected to follow suit over the next few weeks with mortgage rate cuts, so they could fall further.  

A big driver of declining rates is the expectation that the BoE will cut the base rate earlier than expected from May 2024. By the end of this year, interest rates are forecast to fall below 4%.  

While this is positive, big events such as the Spring Budget on 6 March and the General Election, expected in the second half of this year, may have an impact.   

If you plan to remortgage but are concerned about affordability, there are many options to consider.  

Worried about finding the most competitive mortgage? A mortgage broker can help. Unbiased can quickly connect you with a qualified broker who’ll find the best deal for your circumstances. 

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About the author
Lisa-Marie Voneshen is a Senior Content Writer at Unbiased. She is an award-winning journalist with nearly a decade of experience writing and editing content across various areas, including personal finance and investing.