“Positive news for borrowers” – brokers react to Bailey’s signalling of a potential slowdown of base rate increases

At a meeting of the Treasury Select Committee on Wednesday, Andrew Bailey, the Governor of the Bank of England, said that the UK is transitioning from a phase of necessary rate increases to nearing the peak of the cycle.

Following 14 consecutive base rate increases and mortgage market turmoil over the past few months, this news comes as a sigh of relief to brokers and borrowers alike.

In light of this, news agency, Newspage, asked mortgage and property experts for their predictions of where mortgage rates are headed next.


Riz Malik, founder and director at R3 Mortgages:

“Andrew Bailey’s comments were a surprise and we expect mortgage rates to continue to fall leading up to the 21 September.

“However, the reductions will likely be small and often. I am expecting more high street lenders to reprice within the next week, with criteria expansion as well.

“Given there are a large number of maturities within the next six months, this will be positive news for borrowers.

“The chances of the Monetary Policy Committee going back on the Christmas card list are increasing.”

Gary Bush, financial adviser at MortgageShop.com:

“We were calling for a Bank of England pause in base rate increases before the last Monetary Policy Committee meeting, something that seems even more relevant now.

“The markets will react well to the Governor’s latest comments, which should lead to more fixed-rate mortgage decreases from lenders.”

Craig Fish, director at Lodestone Mortgages & Protection:

“Andrew Bailey’s comments were interesting and unexpected.

“There is confidence that this will settle the nerves of the lenders and we will continue to see small tweaks to interest rates over the next couple of weeks leading up to the 21 September when the Monetary Policy Committee makes its decision.

“It has certainly calmed the markets, as we have seen SWAP rates continue their steady decline.

“At this stage, it looks like Andrew Bailey’s comments may just have given us Christmas back. Let’s hope that the Monetary Policy Committee doesn’t take the place of the Grinch and steal it away from us.”

Jamie Lennox, director at Dimora Mortgages:

“Following the first real comments from the Bank of England that we are close to the end of rate increases, this should give lenders more confidence when it comes to pricing their mortgage deals.

“That, combined with a slowing property market in transactional terms, means lenders are fighting it out to secure market share, with many well short of lending targets for the year.”

Lewis Shaw, owner and mortgage expert at Shaw Financial Services:

“Given how swaps and gilts have moved since Andrew Bailey spoke yesterday at the Treasury Select Committee, along with the reduced demand in the property market, it’s nailed on that we’ll see more rate reductions as early as next week.

“I expect to see further reductions from some of the big six who are desperate to get more business on their books and can afford to cut their margins.

“Only time will tell, and whilst predictions can often be wrong, on this occasion I’d stake my house on it.”

Graham Cox, founder at Self Employed Mortgage Hub:

“Both Jeremy Hunt and Andrew Bailey seem to be making positive noises about inflation, so it wouldn’t surprise me if there’s no base rate increase on September 21st.

“If there is, it could well be the last. Whilst we wait with bated breath, I suspect UK mortgage rates will continue to drop, as demand has decreased sharply over the past couple of months and lenders will be getting twitchy about transaction volumes.”

Steven Morris, advising director at Advantage Financial Solutions:

“Any predictions around the future of mortgage interest rates need to be taken with a large pinch of salt, particularly this year, where the economic outlook has shifted gears and directions more frequently than anyone could have expected.

“For any prediction, mortgage brokers typically look to the trend in ‘swap rates’ which are the guideline rates that lenders base their fixed rate pricing upon.

“These have continued to come down in recent months.

“Most notably for the first time in a long time, we are seeing reductions in the cost of 2-year swap rates, not just the 3-, 5- and 10-year swap rates.

“Perhaps this is an indicator that the market expects economic improvement even within two years, instead of after two years, as more recently predicted.

“Nonetheless, in my eyes, Andrew Bailey’s comments should give lenders increased confidence to start passing on more significant rate reductions to borrowers.”

Luke Thompson, director at PAB Wealth Management:

“I believe that mortgage rates will continue to fall until the next interest rate decision by the Bank of England.

“However, the falls that we are seeing at the moment are generally quite small and I feel that this is something that will continue moving forward.

“A lot of this increased competition in recent weeks is, I am sure, down to lenders needing to hit their targets for the year.

“With that in mind, they are jostling for position in the sourcing lists and are constantly introducing small rate cuts to get them to the top of the tree.

“If this prediction from Andrew Bailey is correct, which is a big if as all his other previous predictions have been wrong, we could see lenders continuing to cut lending rates even if the base rate does rise again.”

Peter Stamford, director and lead adviser at Moor Mortgages:

“Bailey’s latest remarks were a bit of a surprise to me. They signal a potential good spell for borrowers on the horizon. As we near the next base rate decision, I’m bracing for a series of modest yet frequent rate cuts from high street lenders, who seem keen to expand their criteria and snatch a larger market share amid the dwindling demand for property.

“With the ever-shifting economic landscape and fluctuating swap rates, lenders seem poised to offer more substantial reductions, fostering a climate of optimism and keen competition. Let’s watch this space closely.”

Ranald Mitchell, director at Charwin Private Clients:

“The rate war will continue as the fierce competition for market share continues.

“Even with another base rate rise to combat inflation, lenders must lend and it looks like they are miles off target.

“It will be interesting to see how this all plays out, and importantly how lenders react to base rate movements.

“In many respects, mortgage customers find themselves in a position that could have been a lot worse.”

Charles Breen, founder and director at Montgomery Financial:

“I think that rates will increase again at the next Monetary Policy Committee meeting and then we will have a period of stability for six months.

“Hopefully, the latter half of 2024 we will see rates decreasing. It is all dependent on inflation and if that keeps trending down.”