Mortgage provider issues warning ahead of Bank of England interest rates drop

Mortgage borrowers eagerly awaiting the Bank of England to finally dropping interest rates have been issued a word of caution.

Jo Pocklington, managing director at Purplebricks Mortgages, spoke to Express.co.uk about rate predictions and what it means for borrowers, with the base rate held at 5.25 percent in the central bank's latest decision.

She said: "Market expectations suggest at least one rate cut in 2024, with the small possibility of a second cut."

But she warned that the drop in rates may not be as steep as some would hope for.

She explained: "The anticipated base rate reductions is expected to be gradual, with close attention paid to market factors and the base rate projected to fall to 3.75 percent by the end of 2026."

The mortgage expert set out what this will mean for those with mortgages.

She said: "If you're on a variable rate or tracker mortgage, a drop in the base rate would lower your payments. However, most people in the UK have fixed-rate mortgages and wouldn't see an immediate benefit from a base rate reduction.

"For personalised advice and to explore your options, it's best to consult a mortgage broker. They can provide tailored guidance and keep you informed about market changes."

She added: "By consulting with a mortgage broker and preparing in advance, you can ensure you secure the best possible deal when it’s time to remortgage."

Lucian Cook, head of residential research at Savills, said after the latest rates freeze was announced: "It was no great surprise to see the bank base rate held at 5.25 percent.

"With the vote remaining at 7-2 in favour of holding rates rather than cutting them, it is clear the monetary policy committee will want to see an easing in measures such as wage growth before they cut rates.

"The first rate cut will be vital in boosting consumer confidence. Even if it doesn’t immediately change the headline cost of fixed rate mortgages, it will begin to make it easier for borrowers to meet banks’ affordability tests, which are more closely linked to the rates banks offer when such deals come to an end."

The base rate remaining at its current level is good news for savers as they continue to get high rates on their savings.

At the time of writing, the top-paying savings accounts for fixed term and easy access accounts each have rates above five percent.

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