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/

You’re right that 4.4% is a good rate in the current climate and I don’t think you were trying to minimise that it’s hard for some people just by saying you personally felt relieved that it was not as bad as you were dreading.

There was much speculation on earlier threads & elsewhere about the possibility of mortgage rates going as high as 7 or 8% so naturally home owners can feel relief at a rate starting with a 4 or 5 rather than higher! Of course they would prefer them to have continued to start with a 1 ( so would FTBs) but I agree with you that people shouldn’t have really expected rates to stay that low forever.

Which is not at all the same thing as saying we are unsympathetic to people struggling to buy a property or pay a mortgage at these higher rates which seem to be the new “normal”. I have every sympathy for people whose mortgage rate has gone up significantly as I’ve experienced it in the past so know how it feels.

@Dumplings23 I'm in my 30s since I've been an adult all I've known is 1% -2% rates. That is "normal" for most millennials and gen z. In return we have the highest housing costs in any generation.
Sick of hearing how people should have known or paid less for property. Sure I should have purchased when I was in secondary school even better primary school or the womb living in my mums council house...

@Dumplings23 I should add we thankfully are high earners so have no issues repaying our mortgage but the point still stands

@TrudyProud I’m in my 30’s too. All I was trying to say was I was expecting 7% so 4 isn’t as bad. Still an increase which isn’t great but nowhere near the increase I thought it’d be.

One side effect that we forget about a little bit is what higher rates mean to the banks, as the banks WANT to lend to us as that is one of the ways they earn their income!

Barclays profits tumble 12% as UK interest rates hit mortgage demand

https://www.theguardian.com/business/2024/apr/25/barclays-profits-tumble-12-per-cent-uk-interest-rates-hit-mortgage-demand

Aw poor Barclays 🎻

Ha, yeah, every sympathy and all that...

Thanks to @DrySherry for posting this article from Sky News on another thread about NatWest increasing mortgage rates by up to 0.22% & Santander by up to 0.25% from tomorrow.

In the same article the question is asked Where will the base rate go this year?
with the comment that "The majority of the bets, according to LSEG data, are on the first cut coming in August (previously this was June) and the second in December. This would take Bank rate from the current level of 5.25% to 4.75%."

https://news.sky.com/story/money-latest-personal-finance-mortgages-brexit-sky-news-blog-13040934

This is the BBC's take on the story.

It does say
"The average rate on a two-year fixed deal is now 5.87%, according to the financial information service Moneyfacts."

And is not giving dates for rate cuts by the BoE, saying merely
"It is now not expected to cut the rate as early or as often as previously thought."

https://www.bbc.co.uk/news/articles/c3g5jrl9yg4o

Story also being reported in The Standard "According to personal finance information site Moneyfacts, the average two-year fixed residential mortgage rate today is 5.87% and the average five-year fix is 5.44%."

https://www.standard.co.uk/business/lenders-increase-mortgage-rates-natwest-santander-borrowing-home-loan-bank-of-england-property-b1154401.html#:~:text=According%20to%20personal%20finance%20information,%2Dyear%20fix%20is%205.44%25.

"It does say"The average rate on a two-year fixed deal is now 5.87%, according to the financial information service Moneyfacts."

I think we're headed back toward a 6% average in the next couple of months :(

Yes I know that's what I posted, and the average five year fix is 5.44%

Time will tell if mortgage rates continue to rise a little or not but it seems likely they will fall when the Bank of England base rate does later this year, don't you think? Most people think the question of when the base rate falls is when not if, but maybe you disagree with that?

Sorry @DrySherry I thought you were replying to me but I realise on reading it again you were replying to Cher

I'm not at all sure Twiglets1, I can also see the possibility of a base rate increase. If your asking me which is more likley - I say small reduction but not until toward the end of this year.

Nationwide who were one of the lenders offering the lowest rates for first buyers have also upped their rates this morning

just sorrows 😩

It’s very unfortunate for the younger generation.
They have only been exposed to a very unique period in economic history of a disinflation cycle being extended post 2008 with the aid of cutting and rates and printing trillions of QE.

House prices affordability ratios (10/11 times earning in London) have gotten dislocated from historical norms.

Thats not anyone’s fault, younger people still have the need to have families and homes of their own so they’ve had little choice but to participate. There was opportunities to fix at long 10+ year fixes at 1-2%, but the ones already benefiting asset appreciation were in a higher leverage position to take advantage (which is why BTL took off) at the further expense to the younger generation pushing them out and prices up.

I warned many on here there would be no central bank rate cuts and that a secondary wave of inflation would begin to happen. If the BoE cut in June regardless they risk severe devaluation of the £ against the $.

Now however we are back creeping towards 6%+ mortgage rates.

https://news.sky.com/story/amp/wait-for-interest-rate-cut-supresses-house-price-growth-13126662

Fed kept rates unchanged yesterday. Their commentary about other countries was interesting. If the UK cuts rates then it is possibly a sign of bigger issues coming down the pipe. If so, let's hope rates stay unchanged.

"The Fed's moves are being closely watched around the world where many central banks, including the Bank of England, have also had a prolonged period of sharply raised rates.
Mr Powell said policymakers in other countries may move more quickly than the US to cut rates due to worries about economic slowdown.
"The difference between the United States and other countries that are now considering rate cuts is they're just not having the kind of growth we're having," he said. "We can be patient."

https://www.bbc.co.uk/news/articles/c4n1v7dxzx0o

"It’s very unfortunate for the younger generation."

It's an absolute national social disaster for young people & new entrants and has been for a long time now. Particularly more so recently with the added COL issues and normalised borrowing costs - large swathes of decent hard working graduates are entering the work place with almost no hope of being able to see a way to buy a home to feel secure in. They are often saddled with massive study debt, family in many cases unable to gift them enough to get started and the actual cost of buying a home at the new costs of borrowing mean they are paying double on what we're already historically overpriced homes.
I despair for them, I really do. Home values need a hard reset, but it looks unlikely to be allowed to happen. A mild softening seems to be the best they can hope for at the moment.
Meanwhile many older generations, mine particularly, who were lucky enough simply to be born at the right time, further add to the issue through parasitic acquisition using BTL leverage. Most of these can't even afford to become Landlords, they do it using leverage...

"Very unfortunate" would not be my choice of words.

Yes, interesting comments by Mr Powell about other countries. I don't believe that the UK will necessarily just follow the Fed, as some people have previously suggested on here.

We may reduce rates before the Fed does, though no changes are now expected before June at the earliest of course.

Couldn’t agree more about how the young are being treated.

New to the thread, mortgage runs out in November (been on 1.9% for the past 5 years! 😬)

we are also thinking of moving house. I’ve noticed nothing much is selling round here and keeps reducing, I’m assuming this could be linked with these ridiculous interest rates? Does anyone know if the data is showing a decrease in house prices? Surely house prices MUST start dropping if interest is creeping to 6%😳 how on Earth will most first-time buyers get on the ladder without significant help.

" I’m assuming this could be linked with these ridiculous interest rates?"

I would not classify these as ridiculous. When DH and I bought our first small place in the early 2000s we were paying 6%. it was the norm, as it had been for the long term. DH works in the city and told me that the "new norm" is actually the norm, and the last 15 years were an experiment x

Your new rate is likely to be a bit of a shock unfortunately after paying just 1.9% for the past 5 years. However, based on what other people have reported on this thread and previous ones, there are fixed term deals around starting with a 4 for people with a lowish LTV so the rate may not be as high as you’re fearing? Also, the Bank of England base rate is expected to be slightly lower by November so that should help.

The usual advice is to start looking around 6 months before your mortgage is up for renewal. If you lock into a deal in advance, make sure the lender will reduce it if their rates go down in between agreeing the deal and the new mortgage starting.

I don’t agree with much of what oil trader says or their supposed “DH” who works in the city but I do agree that interest rates aren’t actually ridiculously high at the moment, historically speaking. It is the ultra low rates that have been unusual but it’s understandable that younger people who have only known low rates do consider them to be normal.

@oiltrader ah fair enough but were average house prices vs average salary a bit better than current times?
6% just seems very high in relation to current house prices and salaries!

'It's an absolute national social disaster for young people & new entrants and has been for a long time now. Particularly more so recently with the added COL issues and normalised borrowing costs - large swathes of decent hard working graduates are entering the work place with almost no hope of being able to see a way to buy a home to feel secure in. They are often saddled with massive study debt, family in many cases unable to gift them enough to get started andthe actual cost of buying a home at the new costs of borrowing mean they are payingdouble on what we're already historically overpriced homes.'

You are absolutely right @DrySherry
A national social disaster is a good way to describe what has been happening over the last few decades. It will not end well at all. I can see violence and extreme politics coming in the future as a result of the appalling choices that have been made.