Will interest rates go down in 2024?

Will interest rates go down in 2024?

The base rate has been held at 5.25% since August 2023. Falling inflation had raised hopes that the Bank of England may look to start cutting the cost of borrowing as early as March. But will a surprise slight rise in inflation in December dampen those hopes?

Inflation has fallen significantly through 2023. With wage growth slowing more than expected and the economy stagnating, speculation has been rife that the central bank will start cutting rates sooner.

However, December’s CPI inflation figure rose unexpectedly for the first time in almost a year, albeit by a small 0.1% to 4% – double the 2% target. The Bank of England has also been keen to stress that rates will not be coming down anytime soon.

If you have a fixed-rate mortgage deal coming to an end soon, or you’re on a standard variable-rate or tracker mortgage that follows the base rate, you’ll be keeping a keen eye on where it will head next and when.
Read more from The Times Money Mentor >

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As rate rises now appear to be on hold, what are the ups and the downs?

As rate rises now appear to be on hold, what are the ups and the downs?

The Bank of England’s decision to hold rates at 5.25% for a second time came after 14 increases. So what does this mean for consumers? Are we likely to see more affordable mortgage deals? And can we no longer expect bumper savings rates from the banks?

Over the past two years, mortgage borrowers have seen the cost of a home loan spiral. At the same time, savers finally started to enjoy some decent returns after years in the doldrums. A number of accounts are currently paying more than 6% interest, particularly some of those offered by the so-called challenger banks.

But the Bank of England was keen to point out that dropping rates was not on the agenda yet. Governor Andrew Bailey said last week: “It’s much too early to be thinking about rate cuts.”

Damien Fahy, at website Money to the Masses, says that if we are at peak rates, what is important now is how long we stay there. “The worry is that most consumers seem to believe that rate cuts will be around the corner, but they are probably getting ahead of themselves,” he says.

The cost of new fixed rates – the vast majority of UK mortgage borrowers are on this type of deal – has been falling for some time. Figures from property website Rightmove on Thursday showed the average new five-year fixed-rate deal was 5.36%, down from 5.97% a year ago. The average two-year fix is 5.81%, down from 6.22% a year ago. Read more from The Guardian article >

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Popular question: Will interest rates go down?

Popular question: Will interest rates go down?

The Bank of England has chosen to keep the base interest rate at 5.25%, defying expectations that it would increase it for a 15th consecutive time in a bid to tackle inflation. However interest rates – and therefore mortgage and savings rates – remain historically high. So when will interest rates fall?

Popular question: When will interest rates go down?The latest rise in August took the base rate from 5% to 5.25%, its highest level since the 2008 financial crash. The Bank of England met on 21 September and decided not to increase interest rates yet again. This is the Bank of England’s first meeting since 2021 in which it has not hiked the base interest rate.

The decision to maintain the base rate at its current level is mainly attributed to inflation having dipped. The annual inflation rate fell from 6.8% in July to 6.7% in August.

With inflation falling, experts now believe the rate will peak at around a lower-than-expected 5.75% in Spring 2024 before falling to just below 4% over the next five years.

September’s Bank of England meeting marks the first in which the Bank has not increased the base interest rate since 2021. Read more from Money Mentor at the Times >

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Mortgage rate cut for energy efficient homes under government-backed trials

Mortgage rate cut for energy efficient homes under government-backed trials

£4.1 million awarded to green finance projects to help homeowners make their homes more energy efficient.

£4.1 million awarded to green finance projects to help homeowners make their homes more energy efficient.Homeowners who make their properties more energy efficient could see their mortgage rate cut under a new government-backed pilot.

Perenna Bank will receive more than £193,000 in government funding to help develop their long-term, fixed-rate mortgage that will incentivise customers to make their homes more energy efficient by offering to reduce their mortgage rate.

Another trial will see buy-to-let landlords add the cost of making properties more energy efficient onto their mortgage – enabling them to borrow the money for the improvements and include it in their monthly repayments.

Ashman Bank Limited will be awarded £200,000 to design and develop this, which will assess a property’s energy efficiency, provide options on how it can be improved and incorporate the cost of carrying out the work on to the duration of the mortgage.

The projects are among 26 green finance products being developed and tested, backed by £4.1 million of government funding.

They are aimed at encouraging and helping homeowners make their properties more energy efficient, with measures such as loft insulation and double glazing. This in turn will help them save more than £460 a year on their energy bills – one of many ways the government is helping ease the cost of living for families across the country. Find out more from: www.gov.uk >

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Homeowners overestimating costs and timescales of energy improvements

Homeowners overestimating costs and timescales of energy improvements

Barclays is extending its Greener Home Reward Scheme after a study revealed many people overestimate the cost of making energy efficient upgrades to their homes.

Homeowners overestimating costs and timescales of energy improvementsMisconceptions around the cost and the time it takes to install energy efficiency-related modifications are among the issues holding homeowners back, the research shows.

The survey by Barclays and Ipsos of nearly 3,000 homeowners, shows many think the cost of installing solar panels, roof insulation and double glazing is higher than the actual cost.

As a result, over half (55%) do not feel confident making their homes more energy efficient, while a third (33%) ruled out making energy efficiency-related modifications altogether. The study reveals the gap between what homeowners actually paid on average to make improvements to their home, and the amount survey respondents expected to pay.

The largest discrepancy was the anticipated price of loft and pitch roof insulation (£3,371) versus what homeowners actually paid on average (£1,213).

The data also shows that homeowners think the installation of some modifications will take longer than the time works take. Read more from Mortgage Strategy >

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