On Tuesday, high street lenders announced that they had further reduced UK mortgage rates. However, the average price remains above what it was immediately after last year’s disastrous mini-budget.
The Bank of England Governor Andrew Bailey said last week that UK could prevent further rate increases.
Aneisha B. Beveridge is the head of research for Hamptons estate agency. Since Andrew Bailey made his comments, the swap rates [which are used by banks to price mortgages] have dropped a bit.
Santander will cut costs up to 0.14 percentage points. Nationwide, UK’s second largest mortgage provider, will also reduce costs. Hinckley & Rugby Building Society (H&R), Skipton Building Society (SBS) and MPowered Mortgages are among the smaller lenders that have already implemented cost-cutting measures.
Bailey, last week, told the MPs that the interest rates were “much closer” to the peak of the cycle, at 5.25 percent after 14 consecutive increases.
Investors are divided on whether the BoE will increase rates again before the end the year.
Beveridge explained that the recent reductions in mortgage rates are partly due to the fact that the markets anticipated base rates will start to gradually fall next year. She said that lenders take swap rates to the end of the term, so they are already anticipating the base rate reductions for next year. You might see mortgage rates drop a little more now, and less next summer if base rates remain higher.
Moneyfacts reported that the average rate of a fixed-rate mortgage for two years was 6.66 percent on Tuesday. The average rate of a two-year fixed mortgage was 6.66 per cent on Tuesday, according to Moneyfacts.
The average rate of borrowing is still higher than the level reached in October last year, when the unfunded tax cuts included in the “mini” budget presented by then-prime Minister Liz Truss triggered intense volatility on the market and drove the cost for home loans skyrocketing.
“Affordability shapes the lending going forward.” “Higher mortgage rates make it harder than ever to buy a house for single-income buyers,” said Andrew Wishart senior property economist, Capital Economics.
The BoE released quarterly data on Tuesday, showing that UK residential mortgage arrears jumped up to by value – a seven year high in the three month period to June.