Positive Developments for Mortgage Holders as Interest Rates Expected to Decrease Further

Mortgage holders can expect positive news as interest rates are expected to continue declining, despite recent concerns over a potential increase. Following a rise in inflation, some lenders raised their rates, with Santander announcing a 0.2 percentage point increase. However, experts from Hargreaves Lansdown suggest that the overall trend will likely be downward in the coming months.

Sarah Coles, head of personal finance at Hargreaves Lansdown, reassured borrowers by stating, “If you have a remortgage looming, or you’re planning to buy, and this has struck fear into your heart, then the good news is that this isn’t expected to be enormously widespread, and the general direction of travel for rates in the coming months is still likely to be downwards.” She pointed out that the recent increase from Santander was an exception, as other lenders like Barclays and Nationwide have actually decreased their rates.

The average two-year mortgage rates, which stood at 6.85 percent in August 2023, have dropped to 5.58 percent. Despite this positive trend, Coles cautioned that individuals planning to remortgage might still face challenges with their repayments. She advised considering tracker rate mortgages, which fluctuate based on the Bank of England’s rates, or fixed rate deals for those seeking certainty.

In the event of unexpected rate increases, securing a fixed rate deal may provide a buffer against potential financial strain. Coles also underlined the importance of seeking assistance from lenders if individuals encounter difficulties with repayment, as there are various options available to alleviate financial burdens.

Looking ahead, the Bank of England maintained the base rate at 5.25 percent in its latest decision, with predictions that it will continue at this level. Rohit Kohli, director at The Mortgage Stop, highlighted the likelihood of minor fluctuations in interest rates from lenders, emphasizing the ongoing battle to secure lending amidst economic fragility.

As mortgage holders navigate these developments, staying informed about personal finance news is crucial. For the latest updates, individuals are encouraged to follow @ExpressMoney_ on Twitter to access reliable and relevant information.

Overall, despite initial concerns over potential rate increases, the current outlook for mortgage holders appears positive. Based on expert insights, the expectation is for downward movement in interest rates in the near future, offering some relief to borrowers amidst economic uncertainties.