The Bank of England's rate committee met on Thursday to decide on the next Base Rate move. Predictions for another 0.5% increase to 4% this month, followed by one final 0.25% increase in March are so far correct. Beyond this a reduction is expected by the end of the year. Any movement in the Base Rate will effect Tracker and Discount mortgage products, as well as SVR's - but lenders continue to shave small amounts off their Fixed Rate products as these are priced by a number of factors rather than just the Base Rate alone. One factor is competition - lenders will be forced to work harder this year for their market share as borrowing levels are unlikely to match 2022. This will be welcome news to the holders of the 1.8m mortgages that need renewing this year - all of which will have to pay more. Which is a popular option at the moment ? - a Tracker mortgage - some borrowers do not want to lock in a 2 or 5 year fixed rate at current levels - they'd rather follow the Base Rate up and then down whilst having the flexibility to change at a small or no cost to a Fixed Rate when they become more attractive.

Mortgage rates have continued to fall since the highs in the last quarter of 2022.  Lenders were expecting this latest increase and it is thought they have already factored this into the fixed rates being offered, so experts are not expecting fixed rates to increase in response. Residential 5 year fixed rates have fallen from 5.50% available in December, to rates of 4.10% on offer today. Reductions like this sees significant savings to those embarking on a home buyer journey in 2023.

Buy to let mortgage rates have also been coming down with rates available as low as 4.99%. This has been welcomed and needed by landlords, as with buy to let mortgages the interest rate influences affordability and the size of the loan lenders will offer. With rents continuing to rise, landlords need this encouragement to stay in the lettings market as this will only reduce the supply and further put pressure on rents, which isn’t positive for the wider economy.

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