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/

https://www.telegraph.co.uk./money/property/mortgages/mortgage-rates-rise-despite-predicted-bank-rate-cut/

Yes people haven’t quite gotten their head around, that the cuts have already been priced in.

Yields are still rising (as is the US) yet the central banks are cutting regardless which is highly inflationary.

Hence banks are raising mortgage rates instead of cutting them.

@Twiglets1 , as this is a thread intended to help people make decisions about their mortgages, it's very relevant to mention money market rates as these are the primary influence on lenders' rates, rather than the bank base rate. A lot of people were expecting mortgage rates to fall after the cut in August 24 (ditto after the September cut in the US) but they have gone up in both countries, causing some confusion. Explaining this is not patronising, it's informative and could well be helpful to some people. As per the article that @Lightscribe linked to explained, some lenders are raising rates more despite the expected base rate cut of today.

The way you talk to me is patronising @rainingsnoring

You can mention money market rates as much as you want but please don’t single me out as someone who may not understand things.

I can't control your reaction to my posts@Twiglets1but I'm sorry if you find them patronising. You've behaved pretty badly yourself over the last couple of years, making repeated incorrect accusations around about me being from HPC forum, being a man, wanting a house price crash, etc. Some people just disagree with you at times and are prepared to say so, despite their views not always being popular. They don't deserve to be attacked for not agreeing with you or the majority.
I'm more than happy to leave this here and not continue a childish sort of exchange. Hopefully you agree and this thread can continue to be a helpful, supportive one.

No one is attacking you @rainingsnoring I was simply asking for you not to single me out as someone who may not understand things.

@Twiglets1 you know that you are being extremely disingenuous here, having repeatedly attacked me and one or two others over the last couple of years on this board.
As I said, let's just leave it here shall we and get back to the purpose of the thread.

I’m not bring disingenuous I’m simply asking you not to single me out again as someone who may not understand things.

If anyone has felt attacked by me or anyone else they should report it.

Happy to return to the purpose of the thread now.

The Fed did reduce their rate today to 4.5%

And where America leads the UK follows (apparently)

More UK interest rate reductions expected in 2025 down to about 4% but as always, time will tell.

sigh. Yes but again cutting rates does not translate to cheaper mortgages.., it’s already priced in.

https://x.com/barchart/status/1854640729001201987?s=46

I never said they did @Lightscribe so save your histrionic sighs.

I’m fully aware that the 0.25% cut today is already priced into the fixed rate mortgages currently on offer. Not everyone is on a Fixed rate mortgage though so people on a Tracker should see an immediate reduction.

Also, if the base rate keeps reducing as it is expected to do then eventually that is going to translate into cheaper mortgages being available to more people, not just those with big deposits.

Savings rates will likely fall immediately a reduction in the base rate is announced but mortgages - not necessarily.

Also, if you’re going to post a chart @Lightscribe you should at least tell us which source you got it from ( apart from just X) so people can decide whether they believe it to be a reputable source or not. Who actually produced that chart, which country is it referring to & what methodology did they use?

What are we thinking mortgage rates will be in 2029/30?

It’s bar charts that take actual official data from you know actual official charts.

It’s not main stream media that you keep linking your opinions to, use any source you want the current US 30 year rate is the current US 30 year rate.

www.nasdaq.com/articles/current-national-refinance-rates-november-1-2024-rates-move

BoE have already turned around and said that they won’t be able to cut as rapidly as predicted. Notice the change in narrative to a couple of months ago?

No doubt in 6 months time you’ll be linking to articles of why the BoE couldn’t cut anymore due to ‘14 year Tory austerity’ legacy economy handed over to Labour or suchlike.

You still haven’t explained where the source of the chart and does it even refer to the UK or the US?

I wouldn’t like to speculate so far ahead as things can change. The Budget changed Analyst predictions even for 2025 so while the base rate is still predicted to fall to about 4% it was more like 3.75% before the Budget.

Current predictions are 4% by the end of 2025 then a further 25% reduction in the base rate by early 2026.

I am presuming that the 5 yr fixes have factored some of the changes so I will carry on overpaying. I was hoping for 3.5% but that seems unlikely.

@Lightscribe if you’re going to post a link about 30 year mortgages in the US then at least identify it as such. Mumsnet is a UK site so people could have assumed your graph referred to the UK.

First time seeing this thread - I am pretty clueless when it comes to financial markets etc - my lovely 5 year fixed mortgage is coming to an end next month & I was hoping the 0.25 cut would mean some slighter better mortgage deals, I can see from the posts here that’s not likely.

I have been advised that in the current market a 2 year fix is probably the best way to go, just wondering what thoughts are on that?

I would go for a 2 year fix if remortgaging at the moment as expect the base rate to be lower in 2 years so wouldn't want to be paying more than I have to for a few years. As long as you are not being asked to pay a big fee to fix for 2 years because paying fees every couple of years will work out expensive. If you are staying with your current Lender there probably aren't any fees, but worth checking.

I know others would rather fix for 5 years to gain the security of knowing exactly what they are paying for a longer period of time & eliminate any risk of the amount rising while they are paying high childcare fees, for example. It's a personal decision at the end of the day.

Bank of England cuts base rate to 4.75% – what it means for you and how much further it could fall (Money Saving Expert)

The Office for Budget Responsibility expects the CPI rate of inflation to rise above the Government's target level to 2.6% next year. It says this is due to measures announced in the Autumn Budget, including increased Government spending, as well as a National Insurance rise for employers, which is expected to result in higher prices for consumers.

However, experts say this, coupled with an increase in Government borrowing also announced in the Budget, could slow down the rate of any base rate cuts.

Paul Dales, chief UK economist for research firm Capital Economics, said: "We no longer think rates will be cut quicker in the second half of 2025 and we now think rates will fall only as far as 3.5% in early 2026 rather than to 3%. Note this change is driven by the UK Budget and not the US election."

Susannah Streeter, head of money and markets at financial service firm Hargreaves Lansdown, added: "If the dollar continues to strengthen, it could increase the costs of goods imported into the UK, adding to inflationary pressures. This means that the Bank is likely to go a bit slower than previously expected in bringing in rate cuts. A move below 4% by the end of next year looks more unlikely, but a lot can change between now and then."

https://www.moneysavingexpert.com/news/2024/11/base-rate-cut-november/

Yeah I was thinking if the dollar gets stronger we will need to keep rates higher.

From the same article: I have a mortgage – what does this mean for me?

For those on a fixed mortgage deal there's no change for now – but make sure to check rates if your deal is ending soon. Regardless of what happens to the base rate, the amount you pay WON'T change during your fixed period.

If you're on a tracker mortgage that 'tracks' the base rate, you'll see your rate come down. And a change to your monthly repayment within days or weeks, depending on when your next repayment is.

If you're on your lender's SVR, the rate you pay MIGHT also come down. You're usually moved onto your lender's SVR after your fix or tracker deal ends. SVRs can be changed by lenders at a whim, though normally it coincides with change to the base rate.

2 year fixes generally only benefit the mortgage seller. Have a look at your personal situation, are you expecting to have to pay nursery fees during that time, for example?

We always fixed for life changes to give us financial certainty- fixed until both were at primary school and then no more nursery bills, and our current fix will take us until they’ve finished school.

2 year fixes generally only benefit the mortgage seller - not so if there are no fees attached which there generally aren't if you are remortgaging with the same Lender.

Thanks all, for your replies and useful links.

My kids are teens so no nursery fees, but older one hopefully starting uni next year and am expecting to be paying more towards her living costs than I do now.

I am divorced, lucky enough to have been able to buy my own home, but it means increased mortgage is all on me & I find that scary!

Best offer I currently have is with my current lender, so luckily no fees either, phew!