5% mortgage rates (again)

[Twiglets1]

Following on from the previous two of these threads both with 6% mortgage rates in the title, I think it's more realistic to return to 5% for this one.

According to this Rightmove article, the current average mortgage rate for a five-year fixed rate mortgage is 4.84%, up from 4.85% last week. The current average rate for a two-year fixed rate mortgage is 5.23%, which is unchanged from last week. The lowest available five-year fixed rate is 4.13%, and the lowest available two-year fixed rate is 4.46% – both unchanged from last week.

On 27th March, the average 5 year fixed rate mortgage for someone with a 60% LTV was 4.35%.
For someone with a 75% LTV it was 4.72% whereas 80% was 4.79%.

For someone with a 90% LTV it was 4.98% whereas 95% was 5.47%.

Two year fixed rate mortgages are slightly higher.

https://www.rightmove.co.uk/news/articles/property-news/current-uk-mortgage-rates/

4.84 is up from 4.85? It's down! Albeit not by much.

That's what I thought!

Sounds like your daughter got a good rate. They were actually slightly lower on average in January than they are now, I believe. Which reflects the fact that in January markets expected the base rate to fall quicker than it is now forecast to fall which is not until June or August.

I think in December they originally nailed 4.6 but their adviser then nabbed the reduction to 4.32 in January (same building society) before they exchanged after some sort of market drop.

They seemed pleased with it when combined with the house price they paid too.

They can spend the savings on paint now they are in!

Checking in so I don’t lose the new thread. I have a mortgage offer that’s just run out due to a new purchase and it was 6+ % (specific circumstances and BTL - yep sorry I am a landlord) so I am hoping for something lower on it but not sure that will happen.

Following New thread.

As i suspected, we currently on the right side of rates. We been on 4.1% since Nov 2023 5 year fix.

So lets see how long we continue on the right side of best rates.

Well done guys. Keep the convo going!

following this thread

are we expecting any further changes in interest by end of the month?
we are renewing ours end of this month. currently secured a 4.94% 2 years fixed rate. Not looking to switch lender at this stage.

Not expecting a change to the Bank of England base rate until the summer - maybe June or maybe August.

Lenders may lower or raise rates very slightly anyway but not expecting anything significant.

Rate cuts are not coming if things continue as they currently are.

https://x.com/davidinglestv/status/1777126489986867358?s=46

https://www.ft.com/content/0395f49d-ac44-4698-afc2-d4784204cf41

Rate cut probability continues to dwindle

Andrew Bailey has signalled UK interest rates remain on course to fall in the coming months amid growing fears that stubborn inflation will force the US to delay rate cuts. The Bank of England Governor said he saw “strong evidence” that inflation was continuing to come down in the UK, despite the resilience of the British jobs market.

Mr Bailey’s comments came as the chairman of the US Federal Reserve raised doubts over its ability to reduce rates this year, warning that borrowing costs were likely to remain higher for longer because of persistent inflation.

Mr Bailey said the factors driving inflation, which is expected on Wednesday to have eased to 3.1pc in March, from 3.4% in February, were very different in the UK and Europe compared with the US. He said: “I think there’s more demand-led inflation pressure in the US than we’re seeing. So I think the inflation dynamics are different.”

https://www.telegraph.co.uk/business/2024/04/16/ftse-100-markets-latest-news-oil-price-israel-uk-employment/

UK inflation fell in March from 3.4% to 3.2% in what The Guardian refers to as a "two-and-a-half-year low – easing pressure on households amid the cost of living crisis".

Figures from the Office for National Statistics show inflation continued to fall from 3.4% in February, as food prices rose at a slower pace than a year earlier. City economists and the Bank of England had forecast a slightly larger decline to 3.1%.

The last time inflation as measured by the consumer prices index was lower was in September 2021, when it was 3.1%. A reduction in the rate of inflation does not mean that prices are falling, just that they are rising more slowly.

https://www.theguardian.com/business/2024/apr/17/uk-inflation-falls-bank-of-england-interest-rates

I’m not at all convinced by Andrew Bailey, sorry to say. The trend here is that interest rates are not going to fall this year and he’s just softening the blow.
Almost every month, inflation is higher than forecast and we may be looking at rises again next year as these lower energy and food costs feed through the annual figures. Interest rates for 2025 are anybody’s guess.

Well you are entitled to your opinion of course but I don't know what you mean by the trend here is that interest rates are not going to fall this year. It's only April and too early to say the trend is that interest rates are not going to fall this year. The trend I see is that inflation is falling in the UK and has been for ages now and that is expected to lead to a fall in the BoE base rate this summer.

What trend are you referring to and what reputable economist/analyst is saying the base rate won't fall at all in 2024?

Yes I should explain if I can. As each month goes by, the likelihood of rate reductions decreases. To the point where the US are starting to suggest that there will be no reductions - of course this is due to growth in the US economy. We may be starting to have some growth too leading to the same conclusion.

Yes, expectations for cuts are way down since the start of year... But the UK is not the US and unemployment is sharply on the rise over here. The labour market will force Bailey's hand and the GBP will tank relative to the almighty USD... EUR should go the same route as higher US rates hammer Asia growth, the main EU export market.

The UK is not the US though? Of course they may be heavily influenced by the US but you and Crashy act like they are the same which they are not.

No they are not the same, but the pound will weaken if our interest rates fall below the US. This is inflationary and will need to be carefully considered.
I am not Crashy, but some of the points are worth considering.

you haven't answered the part about what reputable economist/analyst is saying the base rate won't fall at all in 2024?

I think most people agree with you and are unconvinced by Bailey! The fact is that inflation has been much higher and has much lasted for longer than the BOE forecast. It has clearly fallen from the peak but bond yields are nowhere near 2% and the markets are pricing in a lot less rate cuts than they were at the end of 2023.
As you suggest, the BOE are very unlikely to start cutting before The Fed does as it would cause the £ to fall against the $, meaning that we would import inflation. My opinion, as I have said on other threads, is that we are very likely to see some cuts in 2024 because the world economies are v likely to visibly deteriorate further (the US economy is only growing because of debt growth). I think they will come by September 2024. Longer term, as you say, predictions get harder. I think this inflation is going to be far more sticky than lots of people (including the BOE) are suggesting. I think the longer term trend is significant increases in essentials but deflation in other areas. I also think that, at some point, The Fed and other central banks will panic and start QE again, which will be very inflationary. Apart from that, we also have a volatile situation in the ME, which could potentially result in a massive rise in oil price depending on how events unfold. We also have the de-globalisation trend, also v inflationary and the levels of deficit spending in the US is also inflationary. Overall, therefore I think we are very likely to end up with higher bond yields and base rates in the longer term, despite a likely reduction short term (in 2024).

https://uk.finance.yahoo.com/news/world-faces-permanently-higher-interest-174358895.html

Place marking ✔️

I agree with her except the comments about the tight labour market. I think there has definitely been some hoarding of labour but that things have turned now. There has been a huge increase in people signed off sick, which makes the unemployment stats look much better.

BBC article just now on mortgage “hikes” by Barclays, HSBC and NatWest. https://www.bbc.co.uk/news/business-68874847. Values vary between 0.1% and 0.41% at Co-Op. I’ve been following the threads but not been active as I’m not an expert, I’m interested in others thoughts?

I think lending rates are likley to tick up further, it's possible the base rate will too but I'm no expert.