Latest Bank of England interest rate prediction for 2024.
In February the Bank of England interest rate remained unchanged. However, positive news this week confirmed that the rate of UK inflation also remained unchanged at 4.0%. Additionally, house prices are beginning to stabilise according to data released by the lenders Nationwide and Halifax. In a sign of growing confidence, they along with a selection of other lenders, cut interest rates on their 2- and 5- year fixed rate deals. To less than 4.00% in some instances.
As a result, eyes are now on the Bank of England to see if they will follow up on these events. They could look to encourage more activity in the property market by reducing their base rate of interest. In turn this will then allow lenders to potentially cut rates further or encourage more of the outliers to do the same and keep pace with the market leaders. Either way, cheaper deals or more competition will be welcome by those looking to take out a new mortgage in the next few months.
What are the estimated Bank of England interest rate cuts?
Many economists predict a steady drop in the Bank of England interest rate over the remaining 10 months of 2024. By the end of 2024, it is estimated that we will see around 3 drop events. Taking the base rate of interest from 5.25% currently, to around 4.50% at the end of the year.
Decisions to cut rates will be be driven by inflation remaining under control. Or, hopefully moving closer to the Bank of England’s own target of 2%. Also there appears to be a strong pent-up demand for property. First-time buyers will be encouraged to move into their first property as the costs of mortgage borrowing decrease. Cash buyers will also feel more confident that the property price market is finally levelling out after and turbulent 2023. With fears of a property crash subsiding, their investment appears less of a risk.
What could stop the Bank of England dropping interest rates?
Inflation in some core areas is still on the rise, particularly in the service and energy sectors. These will put extra pressure on household incomes, although a welcome drop in the cost of food has offset this.
Wage growth is also still strong and slowing at less of a rate than anticipated. Only once the Bank of England can see that their 2% inflation target is realistically in reach will they consider wholesale cuts to their base rate of interest.
When might we see a drop in interest rates?
Strategic investors are predicting that there is a 60% chance of a 0.25% drop in June this year. This revised upwards from 40% before the latest inflation report. A spring budget is due in March and as we have seen in the past, decisions made here can also influence the financial markets. The Bank of England may want to wait at least a month before making any changes just in case any issues arise to spook the markets or consumer confidence.
However, mortgage lenders will continue to price expected Bank of England interest rate cuts into their product ranges even before any material change is made. So, for now at least we can expect to see mortgage deals drop in cost marginally. With a larger cut expected as and when there is a decision by the Bank of England
Also consider checking out these other great articles and guides:
- Remortgage guide. Achieve the best deal on your new mortgage.
- 25 year fixed rate mortgages.
- Shared ownership guide.
- Understanding mortgage jargon.
Post compiled by Grant Carpenter CeMAP, CeFA – 15 years of regulated mortgage advice.
Please note that the content listed within this post is purely for information purposes only and does not constitute advice.
