Greater number of cheaper mortgages on the way as rates head down

Weak demand for homes for sale could strengthen in the New Year as home loans become cheaper for buyers.

Table of SWAP rates printed in a newspaper with a pen laid across the top.

Better than expected inflation figures had a strong impact on the money markets with SONIA Swap rates moving downwards and making the availability of cheaper mortgages more likely, it has been claimed.

The Bank of England revealed this week that inflation – the rate prices rise at – fell from 4.6% to 3.9% last month, the lowest for more than two years and leading some economists to believe the Bank may start cutting interest rates in the first half of 2024, much earlier than previously forecast.


SONIA, the Sterling Overnight Index Average, is used by lenders to price fixed rate mortgage deals. It’s based on actual transactions and reflects the average of the interest rates that banks pay to borrow sterling overnight from other financial institutions and other institutional investors.

And brokers are already reaping the benefits. Last night mortgage lender Gen H launched 3.94% 5-year fix at 60% LTV – the first sub-4% mortgage deal since Lizz Truss was Prime Minister. Its standard range loan, with no product fees, over five years at 60% LTV, is 3.99%.

Peter Dockar, Gen H
Peter Dockar, Gen H

The firm’s homebuying bundles offer discounted mortgage rates and free valuations when borrowers use the firm’s legal and conveyancing services.

Peter Dockar, Gen H Chief Commercial Officer, says: “2023 started with a bang at Gen H, when we were the cheapest residential lender in the market. I’m delighted to end the year in much the same way.

“Our mission is to help more aspiring buyers access the life-changing milestone that is homeownership, and we hope these rates will be a welcome gift to many this holiday season.”


Rob Gill, Managing Director at Altura Mortgage Finance, told Newspage: “The trend is very much the borrower’s friend where mortgage rates are concerned at the moment.

Rob Gill, Altura Mortgage Finance
Rob Gill, Altura Mortgage Finance

“With Christmas fast approaching we are starting to advise clients there’s no huge rush to secure mortgage rates now as there’s every chance lenders will launch January sale-style rate cuts in the New Year.”

Justin Moy, Managing Director at EHF Mortgages, adds: “Wednesday’s inflation data took the markets a little by surprise and SWAP rates have fallen sharply to reflect improved confidence in a base rate cut coming sooner than expected.”

Lewis Shaw, Shaw Financial Services
Lewis Shaw, Shaw Financial Services

And Lewis Shaw, Owner and Mortgage Expert at Shaw Financial Services, says: “With the final few days of the year upon us, I suspect many lenders will want to wait until the new year and come out of the gates storming with rate reductions to give themselves the best chance of hitting their lending targets in 2024.

“Even with inflation falling, most economists and lenders are predicting a flat year, so lenders will want to fill their boots early, and the sure-fire way of doing that is by hitting the remortgage market hard with sub-4% products early to secure a good chunk of the 1.4M borrowers set to renew their deals in the coming 12 months.”

Table of SONIA SWAP Rates
Source: Mortgageforce 21/12/23

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