After nearly eight months of steady decline, UK mortgage rates have begun climbing again, marking a notable shift in the housing finance landscape. Here's what you need to know about the latest changes and what they mean for your property plans.
The average two-year fixed mortgage rate has edged up slightly to 4.98%, whilst the five-year average has moved to 5.02%. This marks the first rise since February, ending a prolonged period of falling prices that had offered relief to prospective homebuyers and those looking to remortgage.
The upward movement follows stronger swap rates and increased market caution amongst lenders as global financial uncertainty continues to influence the UK mortgage market.
The Bank of England has held the base rate steady at 4% this month, as inflation remains above target levels at 3.8%. This decision impacts standard variable rates (SVRs), which currently average 7.42% across the market.
However, SVRs vary significantly between different lenders. Newcastle Building Society offers one of the most competitive rates at 6.50%, whilst Aldermore's SVR sits considerably higher at 8.83%. If you're on your lender's standard variable rate, it's worth exploring remortgage options to potentially secure better terms.
Recent weeks have seen a flurry of activity from major lenders adjusting their product offerings:
Rate Increases: HSBC and Virgin Money have raised rates across both purchase and remortgage products, reflecting the broader market trend and increased funding costs.
Affordability Support: TSB has moved in the opposite direction, reducing rates on further borrowing mortgages to help existing customers manage affordability concerns.
Expanded Access: Accord Mortgages has broadened its lending criteria by now allowing 90% loan-to-value (LTV) mortgages for foreign nationals without Indefinite Leave to Remain, opening doors for more international buyers.
Despite higher borrowing costs, the UK housing market continues to show remarkable stability and sustained buyer confidence. Average asking prices rose by 0.3% in October, reaching £371,422. This modest growth reflects increased housing supply meeting steady demand rather than speculative price inflation.
Year-on-year figures indicate overall stability rather than rapid growth, with affordability remaining a central concern for many buyers. The market appears to be finding a sustainable equilibrium after the volatility of recent years.
With the autumn Budget approaching, speculation continues around potential stamp duty reform or relief measures. However, nothing has been officially confirmed by the Treasury.
Property experts advise buyers not to delay their moves based on rumours alone, as any reforms could take considerable time to enact and may not necessarily benefit all buyer segments. Making decisions based on your current circumstances remains the most prudent approach.
The pause in falling mortgage rates signals a shift in market conditions, but the outlook remains cautiously optimistic. Here's what to consider:
As lenders fine-tune their offerings and the Bank of England continues to navigate inflation concerns, the mortgage market is entering a period of cautious recalibration. Keep an eye on potential fiscal policy changes, particularly around stamp duty, as the autumn Budget approaches.
For personalised advice on how these changes affect your specific circumstances, speak with a qualified mortgage adviser who can help you navigate the current market conditions.
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