The Bank of England looks likely to cut interest in Spring 2024, according to mortgage professionals.
Free News Agency Newspage asked brokers when they expect Andrew Bailey and co to cut rates after the US Fed signalled that there would be three rate cuts in 2024.
Here’s what brokers had to say:
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“This is a difficult one to predict – however I believe the potential for base rate cuts may happen in May or June of 2024, however, the continued weakening of the pound may accelerate this reduction sooner.
“By the end of 2024, I can see the Bank Of England Base rate between 3.25% and 4.0% however there’s a lot of water to cross before the end of 2024, and a lot can change between now and then.”
Lewis Shaw, owner and mortgage expert at Shaw Financial Services:
“Despite three members of the Bank of England MPC voting to raise rates, the UK economy looks as though it’s teetering on the brink, and the last thing the current government will want coming into an election year is to be faced with a recession.
“So my predictions are we’ll see the first rate cut of 0.25% in May 2024, taking the base rate to 5%, and a 0.5% cut in August, dropping it back to 4.5%, with a final 0.25% cut in November, ending the year at 4.25%. However, a lot depends on inflation data and the economic weather that drifts over the Atlantic from the US Fed.”
Matthew Jackson, director at Mint FS:
“There will be a base rate reduction in the Spring of 2024 – my money would go on a March reduction as the February meeting feels too soon and the MPC may feel that a reduction then would be a comment on their previous decisions.
“I think that will be the only reduction until late in 2024 – and like buses, we will then see either two consecutive reductions or even a 0.5% reduction just before the general election is called. That would leave us with a Base Rate of 4.50% at the end of 2024.”
Craig Fish, director at Lodestone Mortgages & Protection:
“I think the first cut will be in May and will be 0.25% to see how markets react. A recession is looming and the Bank of England will want to try and stop this. Assuming all goes well, that there are no nasty surprises and that inflation is still under control there will then be further cuts on both August and November. We are likely to see 2024 out at a rate of 4.25 or 4.5%.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“I would expect the first base rate reduction in March or May. However, it will only be slow incremental reductions, with further reductions in August and November most likely. I would currently expect three rate reductions over 2024 unless inflation or the economy does something surprising.”
Justin Moy, managing director at EHF Mortgages:
“I reckon the first reduction in base rate will be in June, which gives the economy enough time to settle and slow down sufficiently for some intervention by the Bank of England. That will then continue until the end of 2024, with a target rate of 4% not out of line with many predictions – a reduction of 1.25% overall.
“Naturally, this assumes lots of other issues don’t get in the way, such as above-inflation pay rises, fuel costs are contained, and our overall inflation continues a slow decline towards that target of 2%. We have plenty of financial pain to come in the coming months, but to drive down rates we need a little sufferance first, unfortunately.”
Gary Bush, financial adviser at MortgageShop.com:
“We think the first Bank of England base rate decrease in 2024 could come as early as March, obviously depending on the all-important inflation and GDP data. It seems likely that we could have at least 2 chunks taken off the base rate by BOE, the first a .25% and the second possibly a .75% to allow an easing of the household bill burden the UK has been struggling with.
“A base rate reducing back down to the previous historic low of 2021 is for the birds though – we’d hope to see it settling around the 4%/4.25% area to allow for bank reaction to further issues occurring in the future.”
Anil Mistry, director and mortgage broker at RNR Mortgage Solutions:
“Based on today’s bold moves and remarks from the Bank of England, it’s crystal clear that any drop in the base rate is off the table until at least May 2024. Bailey and his squad are likely to play a waiting game, observing the upcoming quarter’s developments before even contemplating a rate cut. If they do decide to slash rates in May 2024, expect at least another two reductions throughout the year.”
Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial:
“Considering the Bank of England’s track record, they are bound to get the strategy wrong. Andrew Bailey will keep rates too high for too long, making the impending recession deeper than necessary. At that point, rates will have to be slashed and they will be cut by up to 2% in the second half of the year.”
Peter Stokes, director of mortgages at Davidson Deem:
“Money markets seem to expect a 0.25% fall in 2024, and possibly a further 0.5% in 2025. The Bank of England seem to have quashed any hope of early rate reductions in recent press comments, so for me, I think it is likely to be early Q3 before the first drop happens”
Michelle Lawson, director at Lawson Financial:
“With the recent holds I think we will see more of this and, as all past decisions seem to be, will be data driven. With the GDP not being in a great state the Bank will have to do something before things become even more dangerous.
I think we will see a rate drop possibly May/June at the latest. None of the forecasters/economists seem to be able to correlate on this so it really is anyone’s guess. What we have to do is hope the Bank does something soon to undo the mess they have made.”
Elliott Culley, director at Switch Mortgage Finance:
“There is certainly some crystal ball gazing here but if the economy continues the way it is, I would predict the first one will be May. If the Bank of England were meeting in April it would have been then, but I think March will be too early considering all the rhetoric from Andrew Bailey recently and the fact the MPC meeting in December had 3 members falling for an increase in rates. I believe the overall cuts will be between 1-1.25%.”
Kundan Bhaduri, property developer and portfolio landlord at The Kushman Group:
“It’s been a whirlwind year for existing and potential homeowners after mortgage rates soared in the wake of the mini-budget at the end of September 2022. We believe that 2024 will be a blockbuster year for bankers and investors who have stood for far too long and have not been able to make their profits in the lull of the current market.
“2024 will begin with a rate cut in January, and we expect to see between three and four rate cuts through the year. Our prediction remains that we will end 2024 with a base rate in the region of 4%.
“To be hyper-optimistic, the rates might even touch the late threes (i.e. 3.75% or thereabouts) if we have a shorter summer and a prolonged winter next year (yes, the weather and inflation are interlinked!), it is likely the interest rates will likely end in the late threes.
“Corrolarily, if we have a longer summer resulting in higher spending, inflation will still be a bug bearer next year and interest rates will be in the high fours.”
Rhys Schofield, brand director at Peak Mortgages and Protection:
“By the end of next year, I’ll eat my Santa hat and beard if new fixed rates aren’t at least 1% lower on average than they are today. Although unfortunately for borrowers they may still be more expensive than everyone has been used to over the last few years.”
Rob Gill, managing director at Altura Mortgage Finance:
“The Bank of England’s ‘Table Mountain’ approach, where base rate stays higher for longer, seems set to delay any base rate cut until at least Q2. While the bank will remain cautious, once cuts do start it seems likely base rate will fall almost as quickly as it’s risen.
“We, therefore, expect 3-4 cuts in 2024 to bring base as low as 4.25% by year end.”
