Fresh rise in mortgage rates predicted
Adapted from a BBC article by Kevin Peachey, Cost of living correspondent 10 October 2024
Falls in mortgage rates could come to "an abrupt halt", according to brokers, with expectations that home loan costs may rise in the coming days.
Lenders have been locked in intense competition for borrowers in recent weeks, which has led to consistent falls in the interest rates charged on new fixed mortgage deals.
This has led to more activity among buyers and sellers in the UK housing market.
But one lender, the Coventry Building Society, is putting up mortgage rates on Friday, and others are expected to follow suit in the coming days.
“The mortgage market has seen rates falling in recent months but that may be coming to an abrupt halt," said David Hollingworth, associate director at broker L&C Mortgages.
How borrowers are affected
About 1.6 million existing borrowers had relatively cheap fixed-rate deals expiring this year. Hundreds of thousands of potential first-time buyers have been hoping to get a place of their own with their first mortgage. All would welcome low mortgage rates.
Someone getting a mortgage a year ago, and able to offer a 40% deposit, faced an average interest rate on a two-year fixed deal of 6.16%. However, by October this year, the average rate had dropped to 4.84%, according to financial information service Moneyfacts.
The reduction is the result of competition between lenders, and the Bank of England making its first cut in the benchmark interest rate for four years in July.
As a result, demand from property buyers, sales, and the number of homes newly-listed for sale rose in September, according to the latest report from the Royal Institution of Chartered Surveyors (RICS).
However, housing experts are predicting that some lenders may now start putting up mortgage rates, perhaps as early as next week.
Some lenders, as seen with an announcement by Barclays, could raise rates on some deals, while still cut rates on others. So-called swap rates, which influence the price of fixed-rate mortgage deals, have been rising in recent days.
"This is a reminder that things can change," said Mr Hollingworth.
"It isn’t a cause for panic but those that have been tempted to wait for lower rates may want to consider locking into a deal in case we see further increases. If expectation eases again it’s still possible to review rates.”
Comment from Phil Clark and Russell Green, Bristol and Weston Mortgages Online. “Regardless of whether you are a first-time buyer, looking to move or remortgage or a landlord, do not hesitate and wait for rates to drop. We recommend that you call us today to discuss all your options and get the ball rolling on your next mortgage!”
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