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BusinessMortgage rates slashed as property market falters in the new year

**The Impact of Slashed Mortgage Rates on Homeowners in 2024**

The property market has found itself facing a turbulent beginning in the new year. Homeowners with upcoming expiring fixed-rate mortgage deals are experiencing a wave of relief, as major lenders have initiated a significant reduction in mortgage rates, potentially helping them save thousands of pounds in interest repayments.

**The Background**

Over the last couple of years, the Bank of England’s base rate has experienced a rapid ascent from historically low levels to a 15-year high of 5.25 percent, resulting in heightened anxiety for tens of thousands of homeowners approaching the renegotiation of expiring fixed-rate deals.

**Lenders’ Response**

Amidst a slow market and anticipations of multiple cuts to the Bank of England’s base rate in the upcoming year, leading lenders have embraced fiercer competition. The UK’s largest lender, Halifax, set the tone for the year 2024 by reducing its fixed mortgage rates by almost 1 percent. The bank slashed rates across two-year, five-year, and 10-year fixed deals by up to 0.83 percent, in addition to decreasing rates by up to 0.92 percent for existing customers.

**Impact on Homeowners**

Halifax’s most affordable two-year deal for customers with a minimum of 40 percent equity in their home now stands at 4.68 percent, featuring a £999 fee. This is notably lower compared to the market average of 5.93 percent for two-year fixed deals, as reported by Moneyfacts. The reduction of 0.83 percent on two-year fixed deals could translate to substantial monthly savings for homeowners.

For instance, a £250,000 property’s mortgage repayments over 25 years would decrease by £122 per month, from £1,556 to £1,434, resulting in an annual saving of £1,464 for homeowners. Leeds Building Society also joined the trend by reducing rates on its mortgage deals by up to 0.49 percent, offering its cheapest two-year fixed deal at a rate of 4.6 percent.

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**Market Dynamics**

The shift in mortgage rates comes in the wake of a decrease in inflation to 3.9 percent in November, intensifying pressure on the Bank of England to initiate interest rate cuts as the economy and housing market experience a slowdown. The number of new first-time homeowners with mortgages has declined from a 20-year high in 2021 to a 10-year low in 2023, underscoring the market’s challenges.

**Expert Insights and Future Expectations**

Industry experts anticipate heightened competition among lenders in the coming months, driven by a desire to capture market share and compensate for the lackluster performance in 2023. Moreover, the projected fall in mortgage rates is expected to facilitate an upsurge in first-time buyer inquiries, particularly in regions where rents have experienced significant increases.

Nevertheless, leading economists caution that homeowners transitioning from fixed-rate deals agreed upon two years ago will confront challenges in a vastly transformed economic landscape. The prevailing conditions, including a decelerating economy and elevated mortgage costs, are likely to maintain a level of financial strain for homeowners.


In 2024, the mortgage market is witnessing a dynamic shift, fueled by competitive rate reductions by major lenders. This has the potential to provide substantial financial relief to homeowners grappling with expiring fixed-rate deals. However, amidst this positive development, it’s important for homeowners to remain cognizant of the broader economic landscape and consult with financial advisors to navigate the evolving mortgage market effectively.

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