In this video, Neil Richardson explains a bit about the current mortgage climate and answers your most pressing questions about what it means.
What’s going on with mortgages at the moment?
In recent weeks, there has been a noticeable decrease in inflation alongside winter weather patterns. Early in 2023, inflation surged as interest rates climbed, but it has since begun to recede.
December saw a modest increase in inflation to 4% from November’s 3.9%, though this is viewed as a temporary fluctuation rather than a long-term trend.
What trends do you expect to see in the next three to six months?
The downward trajectory of inflation raises expectations for future interest rate reductions by the Bank of England, whose target inflation rate is 2%.
As inflation approaches this target, the bank is anticipated to lower its base interest rate, which significantly influences mortgage rates. Market observers predict a series of rate reductions over the next few months, possibly beginning in May, with an expectation of four to five reductions throughout the year.
However, any adjustment in rates will be approached cautiously to avoid a potential rebound in inflation. Assuming inflation continues to decrease, base interest rates could reach around 4% by the end of the year or early 2025, impacting mortgage rates accordingly.
Any advice for dental professionals who may have a fixed-rate mortgage coming to an end?
To navigate these changes, seeking specialised advice tailored to the dental profession is crucial. Dentists often have unique income patterns, transitioning between self-employment and incorporation, necessitating an advisor who comprehends these nuances. Such advisors can identify lenders most likely to approve loans based on individual circumstances and terms.
Additionally, utilising a broker with access to a wide array of lenders and products is advantageous, as high street banks typically offer only their own products. Comparing loyalty rates from existing lenders with offerings from across the market ensures borrowers secure the most favorable terms suited to their specific needs.
In summary, the current economic landscape suggests a forthcoming decline in inflation leading to anticipated interest rate reductions by the Bank of England.
Dentists seeking mortgage financing should seek specialised advice and utilise brokers offering access to a broad range of lenders to secure the most advantageous terms amidst evolving market conditions.
This interview was recorded on 23 January 2024.
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