Fresh rise in mortgage rates predicted

Caz Blake-Symes • October 15, 2024

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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Boost to buying power from changes to affordability tests

By Caz Blake-Symes • May 1, 2025
Adapted from Zoopla’s April 2025 Housing report I mage: The analysis uses average house prices from the house price index and for first-time buyers to assess mortgage payments at different mortgage rates applied to a 30- year mortgage, at different loan-to-values. One emerging trend that we expect to positively support market activity in the coming months is a relaxation in how lenders assess the affordability of new mortgages. While buyers focus on the mortgage rate they will pay, lenders also check whether the borrower can afford a 'stressed mortgage rate' at a higher level than the borrower will pay. ​ While the average 5-year fixed rate mortgage is around 4.5% today, many lenders are currently 'stress testing' affordability at 8-9%. This makes it harder to secure a mortgage without a large deposit. If average mortgage stress rates were to return to pre-2022 levels of 6.5% to 7%, this would deliver a 15-20% boost to buying power. ​ An average first-time buyer with mortgage repayments of £1,020pcm at a 4.5% mortgage rate would typically have to prove they could afford monthly repayments of £1,550pcm at an 8.5% stress rate. If the stress testing is relaxed to 6.5%, repayments would fall to £1,275pcm, boosting buying power. It's a similar pattern for the average homeowner, while the actual impact will vary by lender and type of borrower. ​ This change would consequently supporting demand and sales volumes, helping to clear the stock of homes for sale, rather than boosting house prices. Other existing rules and regulations that remain in place will continue to impact the availability of mortgage finance.  Comment from Phil Clark “This is potentially very exciting news and will give borrowers a greater choice of products if these rules are relaxed. Regardless of whether you are a First-time Buyer, Looking to move, remortgage or invest in property, there are a huge range of competitive mortgage deals on the market. I will be delighted to discuss your specific requirements and offer you the most suitable deal!” Please call Phil on 0117 3251511 or email info@swmortgages.com For more information about the Mortgage and Protection products we offer, please visit www.bristolmortgagesonline.com Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

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By Caz Blake-Symes • February 19, 2025
Adapted from BBC Article by Kevin Peachey, Cost of living correspondent 13 February 2025 Two major lenders launched mortgage deals on Thursday with interest rates of less than 4%, as competition picks up in the sector. The prospect of further cuts in the base rate by the Bank of England has given mortgage providers confidence to reduce their own rates. But the attention-grabbing sub-4% deals by Santander and Barclays will not be available to all borrowers, particularly first-time buyers, and may come with a hefty fee. The return of such deals might prompt other lenders to follow suit after a period of tepid competition. Nationwide, the UK's biggest building society, has said it will reduce some of its rates on Friday. Mortgage deals with interest rates below 4% have not been seen since November. Across the whole market the average rate on a two-year fixed deal is 5.48%. The typical rate on five-year deals is 5.29%, according to latest figures from Moneyfacts. Time to decide Some tracker and variable rate mortgages move fairly closely in line with the Bank's base rate, which was cut to 4.5% a week ago. However, more than eight in 10 mortgage customers have fixed-rate deals. The interest rate on this kind of mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it. About 800,000 fixed-rate mortgages, currently with an interest rate of 3% or below, are expected to expire every year, on average, until the end of 2027. That means a higher monthly bill for many homeowners on their next renewal, but there are signs that the rate they could pay is on its way down.  Bank of England governor Andrew Bailey said the interest-rate setting committee expected to be able to cut rates further "but we will have to judge meeting by meeting, how far and how fast". This will affect savers who are seeing lower returns, but could bring better news for borrowers. The Bank's next rates decision is on 20 March. Message from Phil Clark “Regardless of whether you are a First-time Buyer, Looking to move, remortgage or invest in property, there are a huge range of competitive mortgage deals on the market. I will be delighted to discuss your specific requirements and offer you the most suitable deal!” Please call Phil on 0117 3251511 or email info@swmortgages.com For more information about Mortgage and Protection please visit www.bristolmortgagesonline.com
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