Mortgage Lending Review

Understanding the dynamics of mortgage lending is crucial for both existing and prospective homeowners. This article, drawing on the latest data from Dataloft, offers an insightful overview of the current state of mortgage lending, the implications for borrowers, and the emerging trends as we navigate through 2024.

The State of Fixed-Rate Mortgages

A significant number of mortgage borrowers in the UK have been shielded from the brunt of recent interest rate hikes thanks to fixed-rate deals. These arrangements have provided a stable and predictable repayment plan, unaffected by the fluctuations in the broader economic environment. However, as we move forward, the landscape begins to shift. Approximately 1.5 million homeowners are poised to exit their fixed-rate mortgage agreements in 2024, facing a new reality in the lending market.

The Gap in Interest Rates

Current data reveals a striking disparity in the interest rates between new lending (gross advances) and existing lending (balances outstanding). The average fixed rate for new mortgages stands at 4.73%, a stark contrast to the 2.76% average that existing borrowers have been enjoying (data up to the end of Q3). This discrepancy underscores the changing terrain of the mortgage market and signals a potentially significant increase in monthly repayments for those transitioning from fixed-rate deals.

The Road Ahead for Borrowers

For homeowners whose fixed-rate terms are concluding, the road ahead may seem daunting. The prospect of elevated monthly costs is a reality that many will have to confront. However, it’s not all doom and gloom. The current trajectory of swap rates and mortgage rates suggests a downward trend. This environment presents an opportunity for borrowers to shop around and secure deals that, while potentially higher than their previous rates, could be more favourable than anticipated. Vigilance and proactive engagement with the market can mitigate the impact of these transitions.

Navigating the Market: Tips for Borrowers

In light of these developments, borrowers are advised to:

  • Stay Informed: Keep abreast of the latest market trends and interest rate forecasts. Knowledge is power, especially in a fluctuating market.
  • Shop Around: Don’t settle for the first offer. Explore and compare various mortgage products to find a deal that suits your financial situation.
  • Consider Advice: Consulting with a mortgage advisor can provide tailored insights and options that you might not have considered.
  • Plan Ahead: If your fixed-rate deal is ending soon, start looking for new deals well in advance to avoid slipping onto a higher variable rate.

As we navigate the complexities of the mortgage market in 2024, it’s imperative for homeowners and prospective buyers to remain vigilant and informed. The landscape is shifting, and with it, the strategies for securing the most advantageous mortgage deals.

This article is based on data and information provided by Dataloft, the Bank of England and the Financial Conduct Authority (FCA). For more detailed information, please visit: