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/

Where’s crashytime gone? 🤔

I've found him on another site 😊Missed him tbh.

He bought a house, with cash ;)

Haha that'll be the day 😂

I think he's called it because the numbers currently look okay and he can claim to have achieved 1 of his 5 promises, even though it was nothing to do with anything he actually did. If he genuinely thought that things were getting better, he would have waited until the end of the year. He realises that things are going to get much worse later this year/ next year and that Labour will have to deal with this.

He got banned apparently

Got involved in a conversation about something other than housing and it all went tits up

The Standard article today: Pressure is on for Bank of England interest rate cut as other central banks act

The City was readying for a summer of falling interest rates today, after the first cuts from major central banks added to the pressure on the Bank of England to join in. Canada became the first G7 nation to reduce benchmark borrowing costs. The milestone move for the club of rich-world nations came overnight. Switzerland took similar action last month.

Rate-setters at the European Central Bank followed today with a quarter-point cut to extend the trend. They said: “Underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons.”

The Bank of England will discuss following suit when its Monetary Policy Committee meets in two weeks’ time. But Rishi Sunak’s decision to call a general election for July 4 means the City now expects action later in the summer, after the voting is over. September is now seen as most likely timing for the long-awaited turning point.

https://www.standard.co.uk/business/interest-rate-cut-bank-of-england-andrew-bailey-mpc-boe-election-inflation-b1162551.html

Telegraph article today: Inflation hits Bank of England's 2% target

The consumer prices index (CPI) fell to 2% in May, according to the Office for National Statistics, which was down from 2.3% in April and in line with economist expectations.

It marks the first time inflation has been at the Bank of England’s target since July 2021, before the cost of living crisis saw inflation shoot up to a 41-year high of 11.1% in October 2022.

Services inflation, which has been highlighted as a potential hurdle to interest rate cuts, fell to 5.7% in May, down from 5.9% in April. However, this was less than the drop to 5.5% that economists had predicted.

The Bank of England is not expected to begin cutting interest rates at its next meeting tomorrow but the latest data will likely be a boost to hopes of a reduction in borrowing costs at its next meeting in August.

https://www.telegraph.co.uk/business/2024/06/19/ftse-100-markets-latest-news-inflation-cpi-fall-2pc/

Bank of England holds interest rates at 5.25%

Analysis by Faisal Islam, BBC Economics editor

A June hold as expected, and indeed not even a change in the number of votes for a cut - just two out of the nine-member committee. But it was a close-run thing.
Buried in the minutes of the committee there were signals of a significant change in tone, and a building majority for a cut on 1 August.
This is new news, especially because members of the interest rate-setting committee have been in a general election media blackout.
The seven members who voted for a hold are now split between hawks and doves. The latter believe that the decision even this month was “finely balanced”.
Crucially they are playing down signs from the data that service sector inflation still looks sticky, suggesting it reflects one-off factors such as the rise in the national living wage and bills that automatically rise by inflation, such as broadband and mobile.
So this group, which appears to include the key Bank of England leadership, is playing down the strength of underlying inflationary pressures.
This would be enough for a majority to cut rates, although this was the last meeting for deputy governor Ben Broadbent, who will be replaced by Clare Lombardelli in August.
While not a done deal, this language shows a clear signal to the markets and the public that after the Bank completes its new forecasts for the economy, a cut is now the most likely outcome at its next rates meeting in August.

https://www.bbc.co.uk/news/live/c033rlenvjet

Thank you. That's a pain, I was holding off fixing for a mortgage renewal, on the very slight off chance that rates would come down slightly today.
Is it madness to wait until the 1st August, when our fixed rate runs out on the 30th August?

With most lenders you can agree a rate up to 6 months ahead of moving over to a new fixed rate deal which can then be reduced if their rates reduce during those 6 months.

So you could probably agree a renewal rate now on the understanding that if their 2 or 5 year fixed rates (or whatever length you want) go down before 30th August, yours will too. I would talk to your Lender about that.

Have to say though that a 0.25% reduction on August 1st (assuming it happens which isn't definite) won't have a big impact on fixed term mortgage rates. You may even find that they stay the same because the lenders are already aware that the base rate is very likely to fall in 2024 - quite likely more than once but only by small amounts - so may have already built that assumption into their calculations.

I'm afraid I agree with @Twiglets1 ; everything I have read suggests that banks have already priced in a 0.25% BoE base rate fall this year, and mortgages are unlikely to get any cheaper. You might see an up and down pattern, e.g. by to let landlord rates fall, rates for FTBs increase - but that is just them robbing Peter to pay Paul. They do it all the time, and it seems to change who they are currently offering a good rate to from one month to the next.

A lot of the lenders are still playing silly buggers and increasing rates; three or four major lenders did it again over the last week. But that could just be the robbing Peter effect.

As @Twiglets1 says, get a rate locked in now, and if rates fall, call the bank and ask them to switch the rate for you. NB: when you go direct with a lender, it's your responsibility to monitor their rates and ask them to lower it if they lower the rate on the product you sign up for. They won't do it automatically for you. So YOU have to keep checking back.

Thanks for that.

We're currently with Accord, and the rates they are offering aren't great compared to some for 2 years (we're looking 5.2% compared to some 4.9% elsewhere from a brief glance). They were offering some very slightly under 5% a couple of months ago, but couldn't lock in at the time.
I appreciate we can go elsewhere, and most probably will, but I was hoping that they would come back to 5% and we could have the ease of not having to go through all the document filling and credit checks again- we have childcare and uni living costs going out of the bank now, that weren't going out 5 years ago.

You can go elsewhere but I appreciate it’s a bit of a pain compared to staying with your current lender. Another thing to beware of is if a new lender is charging an arrangement fee to secure the lower interest rate.

If they are it can actually work out cheaper to stick with your current lender so the whole thing is a minefield.

There's an arrangement fee to stay with the current lender too! Seems very cheeky.

Wow, not come across that before and yes it does sound very cheeky!

Money markets pricing in a 45% chance of an interest rate cut in August.

I guess the new Labour Government will want a budget after winning. I remember, that in the past, this has been about 3 weeks after election day.
Starmer is talking about going for growth ie stimulating the economy, so that percentage may change considerably.

Banks know full well that this is a period in time in which a large percentage of people might have trouble meeting affordability criteria when they come to re-mortgage, and are taking advantage of it.

Imagine that, a bank, taking advantage?

O_O

Fixed term products are nothing but a bloody racket imo. I'm becoming increasingly tempted to just go on a lifetime tracker.

The Negotiator: Return to ultra-low interest rates unlikely says lending giant boss

Lloyds CEO Charlie Nunn says while interest rate cuts from the Bank of England expected later this year would be ‘beneficial’, homeowners shouldn’t expect a return to ultra-low interest rates.

He told Sky’s Business Presenter Ian King: “In terms of the impact on the broader consumer in the UK, it’ll take longer to feed through. Around mortgages specifically, we’ve just come off a decade where mortgages have been in the 1.5-2.5% range.

“The expectations the market have is that interest rates probably won’t get below 3.5%. And that means mortgages, or the new normal for mortgages, will be in that 3.5-4.5% range, not 1.5-2.5%.”

https://thenegotiator.co.uk/news/uk-housing-market-news/return-to-ultra-low-interest-rates-unlikely-says-lending-giant-boss/

It's drip, drip, drip ... but hopefully now most people have adjusted their expectations and finances to see current rates as a return to normal. A quarter percent rise or fall is neither here nor there.

If they ever do return to the abnormal low rates of the past 10 years then we'll be looking at a fairly apocalyptic situation and not one anybody should be wishing for.

We are pretty much in the sweet spot at the moment. Interest rates not too high, but not uselessly low. Savers getting something back, as it should be.

I agree! There should never have been such low low rates. It raised house prices and savers got nothing!

Article in The Independent today: Bank cuts mortgage rates for first-time buyers and home movers as shake up begins:

First Direct reduced the mortgage rates it is offering by up to 0.17 percentage points on Tuesday, following a slew of rate cuts by major lenders last week. The bank has cut rates across its range of two, three and five-year fixed repayment mortgages, for first-time buyers and home movers.

The reductions include a cut on a two-year fixed-rate deal for people with a 15% deposit, which is now priced at 4.99%, down from 5.16%. Liam O’Hara, head of mortgages at First Direct said: “We’re pleased to be reducing our rates across our range of two, three and five-year fixed mortgages, across LTVs (loans to value) from 60% to 95%.

Economists have predicted that the Bank of England base rate will be reduced from the current 16-year high of 5.25% at the next vote on August 1 – and there have already been signs of lenders’ mortgage rates edging down.

Last week, Halifax, HSBC UK, Barclays, Santander, Natwest and Yorkshire Building Society were among those to shake up their ranges, with some lenders cutting their mortgage rates more than once over the past couple of weeks.

Some commentators have also suggested that the need to generate more business and ramp up their summer sales may be motivating lenders to tweak their rates.

https://www.independent.co.uk/news/uk/home-news/mortgage-rates-first-direct-buyers-b2576573.html

Yay!!! UP TO 0.17% off, fixed for 2 YEARS!!!!
Wake me up when we get a 1% drop.

lol -that would wake up everyone waiting for rates to come down down before buying a property.

The reduction isn’t huge but it is interesting coming from First Direct who don’t raise or lower rates often. The direction of travel is a promising sign for anyone hoping for the base rate to fall this summer. And a sign for savers too.