Mortgage Introducer asked a number of industry experts what they thought would happen to rates in 2014 and how borrowers should plan now for future rises.
Dominik Lipnicki, director of Your Mortgage Decisions
“How low can you really go? If rates have not already hit the bottom they certainly don’t have far to go. Good things don’t always come to those who wait and I think that is the key message here.
"Competition in the market is already providing some very attractive deals and they won’t last forever. In fact we are already seeing rates creep up slowly.
"First-time buyers are starting to add to the momentum in the mortgage market and Help to Buy 2 will help to maintain this. However buy-to-let mortgages are the key driver. With attractive rental yields increasing alongside house prices it is unlikely that 2014 will see a decline in this sector.
"We are unlikely to suffer a bubble but that doesn’t mean we should regard the lack of housing as any less urgent. We must increase the supply to avoid over-inflation of house prices.”
Lea Karasavvas, managing director of Prolific Mortgage Finance
“Next year is destined to be the year of the first-time buyer. The only pitfall I can see is the supply of property to the market.
"Already, 2013 has seen a significant increase in first-time buyer activity as 90% rates experienced a price war not seen since 2007. With 90% borrowing now at sub 4% it has created a flood of first-time buyers sensing it is the right time to enter the property market.
"With 95% likely to become as competitive next year, first-time buyers will presented with a golden opportunity to get that foot on the ladder.
"Total gross lending for next year is predicted to be its biggest for five years and much of this will be underpinned by 'The Big Three' which will be pricing aggressively to capture market share.
"As more lenders enter the market at 95% the competition will intensify and rates should be driven considerably lower than the current 95% deals.
"Pricing in the second half of the year will predominantly depend on the activity levels of the lenders in the first half but I believe their appetite to lend should keep rates low for the majority of 2014.”
David Hollingworth, associate director of communications at London & Country Mortgages
"As more lenders begin to participate in the second phase of Help to Buy so the options for those with small deposits will grow. We’ve already seen the initial launch have a positive impact not only in the level of interest from aspiring first-time buyers but also how it saw lenders already offering high LTV mortgage improve their rates.
"Of course the growth in first-time buyer numbers is not just a result of Help to Buy although it must have helped the growing confidence of first-time buyers.
"With competitive rates on offer for those with larger deposits it’s hard to see that the demand will fall in the near term.
"It should therefore see a continuation of a competitive market for all mortgage borrowers whether they are buying their first home or looking to remortgage to a new lender for a better rate.
"If talk of interest rates rising picks up pace then that could start to see a shift in mortgage rates and that could bring things back a little. Of course that is only likely to lead to more borrowers keen to fix their rate and it looks likely that the majority will continue to take up fixed rates into next year."
Ben Thompson, managing director of Legal & General Mortgage Club
"At the moment interest rates are at historic lows. With base rate remaining unchanged for coming up to five years and initiatives like the Funding for Lending Scheme keeping the cost of funding relatively low for lenders there has never been a time when mortgages have been cheaper.
"However that will inevitably change. Speculation continues about exactly when we will see the Bank of England increase interest rates. Many commentators have suggested that 2016 looks most likely but it is clear that the Bank of England will leave it as late as possible as they seek to unwind quantitative easing."
