Mortgage rates stabilising as lenders seek to attract borrowers

Created: 17 Jan 2023

Buyers, landlords, and remortgagers will be relieved at the latest data showing mortgage rates have now stabilised with lenders pricing deals competitively to lure in custom. However these rates are forecast to remain at elevated levels for the medium term, affecting UK home loan affordability and evaluations of value.

Fixed-rate mortgage deals have begun to drop across the board after reaching highs of 6 per cent last autumn. However, with interest rates predicted to continue rising this year, it remains to be seen if mortgage rates will follow suit.

According to Moneyfacts.co.uk, the best two-year fixed rate mortgage for home movers and those looking to remortgage is currently 4.74 per cent, while the cheapest five-year fix is 4.39 per cent. These deals are only available to those with a maximum loan-to-value ratio of 60 to 65 per cent. First-time buyers have access to rates of 5.24 per cent and 4.84 per cent for two and five-year fixes, respectively.

Nationwide, the UK’s largest building society, is cutting up to 0.6 percentage points from its mortgage rates, with the rate for a five-year fixed rate mortgage when borrowing 85 per cent of the property value dropping to 4.84 per cent.

In its latest update on the European housing market, the Standard and Poors (S&P) ratings agency forecasted that house prices and investment will suffer from rising mortgage rates, although prices will decline less than initially feared. For the UK, house prices are expected to fall 3.5 per cent in 2023, after rising around 9.5 per cent in 2022.

Savills analysis forecasts price loss reversals by 2026, with the extent of the boom in house prices of the last few years meaning modest capitulations will leave most homeowners unaffected.

The cost of a fixed-rate mortgage is stabilising in Britain, as homeowners and landlords brace for a pivotal year in the nation’s housing market.

https://www.bloomberg.com/news/articles/2022-12-30/uk-mortgage-rates-stabilize-ahead-of-pivotal-year-for-housing-market

References

Savills analysis forecasts price loss reversals by 2026, with the extent of the boom in house prices of the last few years meaning modest capitulations will leave most homeowners unaffected.

The cost of a fixed-rate mortgage is stabilising in Britain, as homeowners and landlords brace for a pivotal year in the nation’s housing market.

https://www.bloomberg.com/news/articles/2022-12-30/uk-mortgage-rates-stabilize-ahead-of-pivotal-year-for-housing-market

References