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/

How do we find out the breakdown of true growth versus immigration/population led growth?

I thought any recent or predicted growth was just because of immigration.

Don’t understand why they would do more rate cuts if inflation is set to rise!

They're worried about lack of/negative growth. That will reduce tax take which makes their large borrowings unaffordable. Lower interest also somewhat reduces the government's borrowing costs along with everyone else's.

@LindaDawn the Bank partly explained its decision for today's cut by saying "there had been substantial progress on disinflation".

With regard to further cuts, this article quotes Nicholas Mendes, of mortgage broker John Charcol, who said: "The Bank of England’s decision to cut the base rate reflects growing concerns over the UK's sluggish economic growth. With GDP (gross domestic product) flatlining for the past six months, demand remains weak, and lowering borrowing costs should help to boost investment, consumer spending, and business confidence."

According to Mendes, this most recent rate cut marks a shift in the Bank's priorities from focusing solely on inflation to supporting the economy more broadly, but he warned: "The challenge now is to strike the right balance without allowing inflation to creep back up. Wage growth remains stubbornly high at 5.6%, and weak productivity raises the risk that inflationary pressures could re-emerge if demand picks up too quickly."

https://www.moneysavingexpert.com/news/2025/02/base-rate-cut/

What @Phineyj said @LindaDawn
Growth is non existent and government and personal debts huge.
However, inflation is likely to rise further and is pretty clearly higher than the official figures for the majority. They may therefore need to raise rates again in the medium term, possibly a lot if the £ falls precipitously.

Santander UK is to offer sub 4% mortgage rates from Thursday

The bank said that from Thursday, borrowers will be able to apply for one of four new products as it launches a range of two and five-year fixed-rate deals at 3.99%. Eligible borrowers will need a 40% deposit to access the sub 4% rates, available for house purchase or remortgaging.

The lender is also making reductions of up to 0.40 percentage points on more than 80 other mortgages products from Thursday.
The new deals include a 60% LTV (loan-to-value) two or five-year fixed rate at 3.99% for home buyers, with a £1,999 fee. A 60% LTV two or five-year fixed rate at 3.99% is also available for homeowners looking to remortgage, with a £1,749 fee.

Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “It was only a matter of time for lenders to bring back sub 4% mortgages as a result of swap rates falling in recent weeks, coupled with a cut to bank base rate.
“This is a positive injection to the mortgage market and when a big lender makes such a move, it can prompt its peers to follow suit with cuts of their own.
“The millions of mortgage borrowers looking to refinance this year need some good news, so it’s safe to say there are big expectations for more lenders to compete on price to entice new business in the coming weeks.”

Santander UK is to offer sub 4% mortgage rates from Thursday

Just to put the flag waving mortgage that jumps through hoops with high fees just to get a headline rate vs the actual average…

Also again I don’t know how many times I’ve explained that any further rate cuts will just increase inflation as the Fed has found out yet again with its CPI reports this week.

High inflation means treasury yields spike which means swap rates won’t be coming down despite what the media is telling you,

That then leads onto low growth which means cutbacks and job losses in a recessionary environment. It’s called stagflation. I’ve said it from the beginning on here.

People continue to stick their head in the sand and don’t pay attention to what’s happening around them.

https://x.com/bbcnewsnight/status/1889821283749138895?s

I expect most of us on this thread are aware that mortgage rates are higher for people without a big deposit and the average rate has started with a 5 for some time. Hence the last two threads on the subject have had 5% mortgage rates in the title.

What is more newsworthy however is that we are seeing the return of mortgages under 4% for those with a deposit of 40% or more. I believe Barclays will be announcing the same today & I report stuff like that because I know some people on this thread are interested in the best mortgage rates available. Others are more interested in the general trend re are mortgage rates rising or falling.

Mortgage rates cut below 4% as competition picks up

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, 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.
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.
"Borrowers have been crying out for better mortgage rates and we are starting to see them," said Aaron Strutt, of broker Trinity Financial.
"If your mortgage is coming up for renewal soon and you have already selected a new deal, it is a good time to review it and potentially swap to a better rate."

https://www.bbc.co.uk/news/articles/c0e43dqv271o

Definitely a hefty fee with them.

My DS 3.69 offer (from early October and LTV 65%) which he still hopes to make had a 999 fee attached. These seem to have a 1999. It's all "cost" at the end of the day.

Very hefty indeed. For remortgaging its £1749 for most products not £1999 but that is almost as bad. My daughter has been looking at them as due to remortgage end of May - the Santander 3 year fix product fee is only £999 weirdly.

Strange that the 2 year fix and 5 year fix both have a higher product fee than the 3 year fix.

Just have to do the sums to work out whether it makes sense to move from her current lender or not. There's no product fee if she stays with Virgin Money but the interest rate is slightly higher.

Oh ignore the above, just realised the 3 year fix product fee is cheaper but the interest rate is higher at 4.18%.

Interesting updates. I fixed at under 4% last year (remortgage, 60% LTV) for 5 years, but now I'm seeing that rates are expected to fall a lot further, so it looks like I jumped the gun.

I am a landlord(lady) based overseas and I was able to get consent to let on this rate for 27 months. I believe I am allowed to remortgage once the consent to let period is up and don't have to wait until the 5-year fixed period ends. If rates have fallen sufficiently by then, I could be looking at a BTL rate that's lower than my current residential rate!

I do wish I had just sold the property. Although it's nice to have a base in London - and I may well return in a few years - there's definitely an opportunity cost of having money tied up in a property in the UK when I could be investing it in the US. Also, leaving aside any capital appreciation, I am making a loss each month due to management fee, maintenance, tax.

I haven’t heard that mortgage rates are expected to fall a lot further @Crushed23

From what I’ve read they are expected to fall a bit but not loads.

I think anyone that fixed at under 4% is not going to feel too bad as it’s a good rate.

That's interesting - I think the possibility of rates unfortunately having to increase by the end of the year - is becoming more likley, not less. So much inflation is currently currently baked in to the system for this year... Where the rates will be in 5 years time is anyone's guess. Best to plan for higher for longer though imo.

What next for interest rates?

At present, markets are pricing in two further interest rate cuts between now and the end of this year. This could see the base rate will fall to 4% by the end of 2025.

However, as is to be be expected, forecasts vary. Santander expects interest rates to fall to 3.75% by the end of 2025 while Barclays is a bit more punchy thinking rates will fall as far 3.5%.

Analysts at Morgan Stanley predict UK interest rates will fall to 3.5% by June next year while Goldman Sachs says interest rates will fall to 3.25% by June next year. The two giant US banks believe the UK economy will struggle over 2025 forcing the Bank of England to take action and cut rates more aggressively.

https://www.thisismoney.co.uk/money/mortgageshome/article-11885727/When-rates-start-fall-Base-rate-forecasts.html

Mortgage rates set to fall as tariffs spark predictions of more interest rate cuts in 2025

Mortgage rates look set to fall over the coming weeks according to a key metric, after Donald Trump's tariff announcements led to predictions of faster interest rate cuts.
In response to Trump's tariff announcements on Wednesday, markets are now forecasting three further interest rate cuts this year by the Bank of England.
The general consensus is that interest rates will end up at 3.75 per cent by the end of 2025, rather than 4 per cent than was previously predicted.
Fixed-rate mortgage pricing is largely based on Sonia swap rates - the inter-bank lending rate which shows where banks think mortgage rates will be two or five years in the future.
Five-year swaps have fallen to 3.64 per cent this morning, down from 4.08 per cent on 27 March.
Meanwhile two-year swaps hit 3.74 per cent, down from 4.11 per cent on 27 March.

Mortgage rates set to fall as tariffs spark predictions of more interest rate cuts in 2025

How far could mortgage rates fall?

While the lowest fixed rate mortgage rarely go below the equivalent swaps, a margin has now opened up over the past few days that mortgage lenders are expected to respond to.

Hypothetically, it could send the lowest fixed rate mortgages down by up to 0.4 percentage points with lenders eager to do business at present.

Unless swaps move upwards again, the lowest fixed rate deals, usually aimed at those with a 40 per cent deposit or more, could fall as low as around 3.75 per cent.

There would also be improvements for those with smaller deposits or equity.

The lowest five-year fix for someone buying a home with a 20 per cent deposit is 4.3 per cent at present.

If five-year swaps remain at 3.68 per cent or lower over the coming weeks, then there the lowest fixed rate for those buying with a 20 per cent deposits could go to 4 per cent or lower.

Mortgage rates set to fall as tariffs spark predictions of more interest rate cuts in 2025

The fed is holding rates. Inflation is about to hit.

I meant to post BBC Business' take on this.

"Interest rates may stay higher for longer
UK interest rates dictate the costs households have to pay to borrow money for things such as mortgages, credit cards and loans. Higher rates also boost returns for savers.

They are currently at 4.5%, but economists are predicting two more rate cuts by the end of the year.

However, the Bank of England highlighted US tariffs as a reason why it avoided cutting rates further last month, saying economic and global trade uncertainty had "intensified".

If prices are pushed up for long enough to affect the rate of inflation - this could mean interest rates stay higher for longer.

Andrew Bailey, the Bank of England governor, said it was Bank's job "to make sure that inflation stays low and stable" and that would be "looking very closely" at the impact of tariffs."

<a class="break-all" href="https://www.google.com/url?q=www.bbc.com/news/articles/czd35l8995eo" rel="nofollow" target="_blank">https://www.google.com/amp/s/www.bbc.co.uk/news/articles/czd35l8995eo.amp

AFAIK Trump wants lower rates.

The market reaction so far to Trump policies has been to lower gilt yields, so that should feed into rates at some point. Whether Trump policies will lead to long term higher or lower rates or not I don't know.

I am confident that if rates go down everyone will be thanking Trump for giving them cheaper mortgages.

Are low interest rates a good thing? We need wage growth

For FTBs or people currently remortgaging they are ...not necessarily a good thing in general though.

In this instance, the lower bond. gilt yields=recession so not a good thing overall. Those who lose their jobs and can't find a new one won't think so anyway.
There will be some that never lose their job and can benefit from cheaper borrowing costs and some who couldn't pay their mortgage at any rate because they no longer have an income.

@GasPanic I'm sure you are right that Trump wants lower rates. Look at the US debt!

As I said on the other thread and have previously said enough times to bore everyone, I think rates will reduce in the short term. Longer term, we are likely to see the opposite. A lot of chaos along the way and a shrinking economy are pretty certain too imo.