If you’re looking to remortgage or buy your first home, finding a cheaper deal can make a significant difference on your monthly finances. So, after the Bank of England’s latest rate cut, we look at whether mortgage rates will follow in a downward trajectory.

Mortgage rates have fluctuated throughout 2024. Generation Home was one lender which began the year with a sub-4% deal, and while other major lenders initially followed suit rates began to climb again.

This was despite slowing inflation and a constant base rate.

But, over the last two months, rates began to fall. In July, a sub 4% deal was back on the market – this time from Nationwide.

The move was a sign of things to come, because after the Bank of England made its first cut to interest rates in over four years, more lenders to make their mortgages cheaper.

So, will rates continue to fall? Below we detail what could be in store for your mortgage in 2024 and we explain:

Read more: Can’t pay your mortgage? Here’s what you can do

Why did mortgage rates rise in February?

At the start of January, big lenders including HSBC, Co-operative Bank and Virgin Money began aggressively cutting interest rates in order to attract new borrowers and compete in a crowded market.

However, the cut was short lived. In March, the average two-year fixed rate climbed to 5.76% – a 0.2 percentage point rise from February, according to Moneyfacts, a data provider.

“Lenders are shifting rates regularly to adjust to the fact that markets now anticipate that base rate may take longer to fall than had previously been hoped,” David Hollingworth, a mortgage broker at L&C Mortgages explained at the time.

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Why have mortgage rates gone down since last summer?

Mortgage rates rose sharply during 2022 and the first half of 2023. This was in response to the Bank of England’s interest rate increases from 0.1% to 5.25%, which rose as the UK fought soaring inflation.

You can find out more about how interest rates affect inflation.

However, inflation has fallen in the UK significantly over the past year. This has led some banks and building societies to expect base rate cuts in the short-term, which has given them more confidence to lend money to borrowers at a cheaper price.

Several major lenders cut fixed-rate deals in July, in anticipation of an imminent Bank of England base rate cut.

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Will mortgage rates go down more?

Most experts believe mortgage rates are due to go down further, they’re just not sure quite when.

If inflation continues to stay low, industry insiders are optimistic that average mortgage rates could fall below 5% again in 2024.

What are the latest UK mortgage rates?

On August 1, the average mortgage rates, according to Moneyfacts were:

• Two-year fixed deal now stands at 5.77%
• Five-year fixed deal now stands at 5.38%

Work out how much you can overpay on your mortgage with this free tool

Looking for a mortgage? Use this free mortgage tool to see some of the best deals

Who can potentially get a cheap mortgage?

The cheapest deals tend to be targeted at existing homeowners looking to move or remortgage, and those with a lot of equity or a big deposit – usually around 40% of the property’s value.

An independent mortgage broker could help you find the cheapest deals on the market for your financial circumstances.

Here are other factors to consider:

• The bigger your deposit the lower your mortgage rate (generally)
• Five-year mortgage deals currently tend to have lower rates than shorter term deals
• Some deals are only available to borrowers in England and Wales
• Your credit score must be in top condition to secure a good deal

You might want to read: Is now a good time to remortgage?

What is likely to be the cheapest mortgage for first-time buyers? 

First-time buyers often have smaller deposits of between 5% and 10% of the value of the home.

A small deposit might mean you are more limited in the number of deals available to you. If you do find a suitable deal, the interest rates are likely to be higher than if you had a bigger deposit because lenders will see you as riskier.

We outline the pros and cons of small deposit mortgages.

You also need to consider any mortgage fees attached to the product. Some deals charge upfront fees or exit charges, while others don’t.

It is often the case that headline-grabbing low mortgage rates also come with the highest fees, which can make a big difference to the overall amount you pay for your home.

Be aware: it is not guaranteed you will qualify for an advertised mortgage deal. Lenders often have strict criteria for who is eligible.

To find the best mortgage deal for you, check out our mortgage comparison tool. This gives the best options whether you are a first-time buyer, home mover, buy-to-let landlord or looking to remortgage.

If you are looking for help to get on the property ladder, check out our guide for first-time buyers.

Is it worth speaking to a mortgage broker?

It can be worth speaking to a mortgage broker as they will have access to a range of deals across the market.

Bear in mind that some banks reserve special deals for their existing customers, which may not be available to brokers. So you might want to speak to your bank or existing lender.

The good news is that you might be able to secure a cheaper mortgage once you have built up more equity in your home.

Looking for a broker? We list the best mortgage brokers