January-March: Starting High
2024 began with mortgage rates still elevated following the turbulence of 2022-2023. Average rates in January stood at:
- 2-year fixed: 5.85%
- 5-year fixed: 5.45%
- Variable rates: 7.50%+
These rates reflected the Bank of England's base rate of 5.25%, which had been held steady since August 2023 as the Bank continued its fight against inflation.
April-June: The Peak Period
Spring 2024 saw mortgage rates reach their highest point of the year. By May, average rates had climbed to:
- 2-year fixed: 6.15%
- 5-year fixed: 5.75%
This peak was driven by persistent inflation concerns and market expectations that interest rates would remain higher for longer. Many homeowners coming off fixed-rate deals faced payment increases of £300-500 per month.
Impact on Homeowners
For a £200,000 mortgage over 25 years:
- At 2% (pre-2022): £848/month
- At 6% (May 2024 peak): £1,289/month
- Difference: £441/month increase (£5,292/year)
July-August: The Turning Point
August 2024 marked a significant shift. The Bank of England cut the base rate for the first time in over four years, reducing it from 5.25% to 5.00%. This 0.25% cut signaled confidence that inflation was finally under control.
Mortgage lenders responded quickly, with average rates dropping to:
- 2-year fixed: 5.65%
- 5-year fixed: 5.25%
September-November: Continued Decline
The autumn months saw further improvements as lenders competed for business and markets priced in expectations of additional base rate cuts. By November, rates had fallen to:
- 2-year fixed: 5.20%
- 5-year fixed: 4.85%
- Best deals available: Under 4.50% for 5-year fixes with larger deposits
Key Trends of 2024
1. The 5-Year Premium Narrowed
Throughout most of 2024, 5-year fixed rates were cheaper than 2-year fixes—unusual historically. This reflected market expectations that rates would continue to fall, making longer-term fixes more attractive.
2. High-LTV Mortgages Remained Expensive
While rates fell across the board, borrowers with smaller deposits (5-10%) continued to face significantly higher rates—often 1-2% above those available to borrowers with 25%+ deposits.
3. Tracker Mortgages Made a Comeback
With base rate cuts beginning, some borrowers opted for tracker mortgages (which follow the base rate), betting on further cuts in 2025.
4. Remortgage Activity Surged
As rates fell, homeowners who had been holding off on remortgaging finally made the move, leading to a busy autumn for mortgage brokers.
Regional Variations
While rates were broadly similar across the UK, some regional differences emerged:
- London and South East: More competitive rates due to higher property values and larger deposits
- Scotland and Northern Ireland: Slightly fewer lender options but similar average rates
- Wales and North England: Growing competition as lenders targeted these markets
What Drove the Changes?
Inflation Control
The primary driver was inflation falling from 4.0% in January to 2.3% by October, finally approaching the Bank of England's 2% target.
Economic Slowdown
GDP growth remained sluggish throughout 2024, reducing concerns about an overheating economy and supporting the case for rate cuts.
Global Factors
The US Federal Reserve also began cutting rates in September, influencing global bond markets and UK mortgage pricing.
Looking Ahead to 2025
As we head into 2025, market expectations suggest:
- Further base rate cuts: Potentially 2-3 more 0.25% cuts, bringing the base rate to 4.00-4.25%
- Mortgage rates: Could fall to 4.00-4.50% for 5-year fixes by mid-2025
- Increased competition: More lenders entering the market with competitive products
What Should You Do?
- Coming off a fixed rate soon? Start looking 3-6 months before your deal ends
- On a variable rate? Consider fixing now to lock in current rates
- First-time buyer? Save for a larger deposit to access better rates
- Existing homeowner? Check if remortgaging could save you money
The Bottom Line
2024 has been a year of two halves for UK mortgage rates. After peaking in spring at over 6%, rates have fallen by nearly 1% by year-end. While still well above the ultra-low rates of 2020-2021, the direction of travel is positive.
For homeowners and buyers, this means more affordable borrowing costs ahead, though rates are unlikely to return to pre-2022 levels anytime soon. The key is to stay informed, shop around, and consider your options carefully.
Use our Mortgage Rate Comparison tool to see current rates from leading UK lenders.