Experts say many homeowners will “not benefit at all” from the latest mortgage rate cuts.
Major financial institutions such as Halifax and NatWest are cutting interest rates.
However, many customers with fixed-rate mortgages are unlikely to see a big difference in their repayments if they started or negotiated a deal within the past year.
Those with fixed-rate mortgages typically receive a fixed rate of interest over repayments over a negotiated period of two to five years.
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Some homeowners may not see the benefit of lower mortgage rates.
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Brits have been forced to grapple with rising interest rates for the past year and a half as the Bank of England raised its benchmark interest rate in a bid to ease inflation.
While this is beneficial for savers, it is driving up mortgage repayment costs for millions of households.
The central bank has paused a series of interest rate hikes as inflation eases, and many analysts expect a rate cut later this year.
This is likely to be a “benefit” for homeowners who are completing repairs and new home buyers, but is expected to be a loss for home buyers who are still in the middle of their contracts.
Nathan Reilly, director of mortgage technology company TwentySevenTech, spoke to GB News about what homeowners and buyers should expect from the property market in the coming months.
“Everything from the markets and the broader economy suggests that we will be in a consistently lower interest rate environment over the medium term, barring another black swan event,” he explained.
“The recent decline is due to a decline in swaps during the Christmas period, and fierce competition is starting again after a slump in 2023, so financial institutions are trying to stay ahead of their peers and provide some stimulus to the market. It was brought about by necessity.”
Mortgage experts have stressed that fixed-rate customers who are in the middle of their contracts are likely to be the biggest losers during this period of rate cuts.
Riley added: “While almost everyone will benefit from a lower rate environment, those who are held back by affordability, such as first-time buyers and movers, will benefit the most. “The most likely ones will be those whose current rates are about to be reviewed,” he added. .
“Unfortunately, businesses that chose a two-year fixed rate may have to make difficult decisions and suffer the pain of being stuck until next year, whereas businesses that chose a five-year fixed rate last year will not. “You won’t be able to make any profit in the short to medium term. ”
According to M, as of January 8, 2024, the average interest rate for a two-year fixed mortgage is 5.81%.oneyfactscompare.co.uk.
According to a financial comparison website, the average interest rate for a five-year home loan was 5.42%.