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- Latest Mortgage News - July 2025
Latest mortgage news
An up-to-date feed of the latest UK mortgage news of interest to home buyers, homeowners and property investors alike...
June 2025 Mortgage News: This month in mortgages
The Bank of England held the base rate at 4.25%. Six members of the Monetary Policy Committee (MPC) voted to hold the base rate, while three voted to cut it to 4%. The hold decision means there’ll be no immediate changes for borrowers on variable-rate mortgages.
Inflation dropped slightly to 3.4%. Though it eased from 3.5% from April, inflation remains higher than the target 2%.
The Mortgage Guarantee Scheme comes to an end on 30th June. This scheme provided homebuyers with access to a greater number of 95% mortgages, though lenders may continue to offer high loan-to-value mortgages.
Recent research suggests 36% of UK mortgage holders do not have any form of income or life cover. This underscores the need for increased education on the importance of mortgage protection insurance.
“The Bank of England’s decision to hold the rate at 4.25% means we’re unlikely to see a significant drop in mortgage rates in the near future. This is naturally resulting in more borrowers opting for two-year fixed deals, giving them the flexibility to take advantage of the cheaper deals that analysts anticipate arriving in the next couple of years. However, short-term fixed deals aren’t right for everyone, so it’s important to compare your options carefully. It’s worth consulting with a qualified broker to receive tailored advice.” - Jason McDonald, Mortgage Expert
The base rate was held at 4.25%, but homeowners are cautiously optimistic about the upcoming August base rate decision
The widely anticipated decision by the Bank of England to keep the base rate unchanged did not cause an immediate impact on mortgage rates, as lenders had likely already factored in a hold. The news may well have been disappointing for homeowners who were hoping for a more rapid decrease in mortgage rates.
While the Bank has hinted at future rate cuts in 2025, concerns about persistent inflation (currently at 3.4%) and global economic uncertainty are encouraging a cautious approach. Analysts are forecasting one or two more rate cuts this year, with the next one potentially occurring in August - though a lot can change before then.
Swap rates are still lower than they were towards the end of last year but have been relatively stable throughout June. This indicates that significant rate changes are not imminent.
Mortgage rates stay largely consistent
Lenders frequently adjust their pricing. Some are tentatively cutting rates in anticipation of future easing, while others are holding firm or even increasing them, wary of persistent economic headwinds. There have been no major market-wide fluctuations in mortgage rates this month.
More interesting is the rise in borrowers looking for shorter-term fixed-rate deals. Last month, nearly half of all mortgage searches were for products with a two-year or shorter fixed term. This trend suggests that both current homeowners and prospective buyers are expecting rates to drop in the future and are readying themselves to be in the best position to benefit.
Speaking with a mortgage broker can help you evaluate your options. There are advantages and disadvantages to consider for all mortgage types, and a qualified advisor can help to recommend the most suitable products for your needs.
Further support for home buyers may be on the cards
The mortgage guarantee scheme comes to an end at the end of June. There’s no denying its impact: over 53,000 mortgages have been completed with the support of the scheme since its launch. The scheme enables lenders to offer 95% loan-to-value (LTV) mortgages by providing a government guarantee for the amount above 80% LTV (thus reducing the risk for lenders).
It’s not yet clear if lenders will keep offering their 95% LTV mortgage products or if the government will introduce a similar scheme (such as the anticipated Freedom to Buy scheme).
Nevertheless, high loan-to-value mortgages remain popular. In fact, the latest Mortgage Lenders and Administrators Return (MLAR) data indicates that the share of mortgages (gross advances) with a loan-to-value ratio over 90% rose to 6.7% in the first quarter of 2025 - the highest level since 2008.
Following a guidance change from the Financial Conduct Authority in March, borrowers may be beginning to benefit from more flexible stress testing by lenders. Firms may now test affordability by considering the impact of probable future interest rate rises, rather than using their standard variable rate plus a percentage. This may well help first-time buyers, home movers and additional borrowers access greater lending amounts.
The housing market remains stable but subdued
According to the Zoopla House Price Index, the house market has seen a slight rebound following a lull after the stamp duty changes came into effect in April. Compared to May of last year, there was a 13% increase in homes listed for sale and a 6% rise in house sales.
Although house prices are increasing slightly at 1.6% annually, the average sale price was 3% below the asking price, suggesting that sellers may be more open to negotiation.
A significant North-South divide continues, with Southern regions, particularly London, seeing the greatest price weakness, while more affordable markets in northern England and Scotland have shown more resilience and price growth.
The future direction of the market will likely be influenced by interest rates and wage growth as affordability remains an obstacle, especially for first-time buyers.
What’s coming up
The Bank of England’s Monetary Policy Committee will meet again on Thursday 7 August. Analysts are still predicting one or two further base rate cuts this year, though it’s perhaps too early to predict whether one of these cuts will happen in August.
Prospective buyers should monitor the fluctuating housing market, as more properties are expected to become available during the summer. If you are remortgaging, it is advisable to start looking at deals three to six months before your current one expires. This will help you avoid being moved to your lender's standard variable rate, which is typically much higher.
May 2025 Mortgage News: This month in mortgages
The Bank of England base rate fell to 4.25%. This was great news for homeowners, particularly those on tracker mortgages who saw their mortgage payments fall immediately. The next base rate announcement will happen on 19th June.
Inflation rose to 3.5% in April. An inflation increase was expected, thanks to increases in household bills and the higher employer National Insurance contributions kicking in. However, this may well influence whether the Bank of England decides to maintain, drop or even raise the base rate in June
100% mortgages hit the headlines. April Mortgages and Gable Mortgages brought fixed-rate 100% loan-to-value mortgage products to the market
Lenders announced their Q1 numbers. Many lenders, including Lloyds Banking Group, Barclays and NatWest, reported a rise in mortgage lending in the first quarter of 2025. This was likely driven by home buyers trying to complete in advance of the new stamp duty changes coming into play.
“As a result of inflation jumping from 2.6% to 3.5%, rates are not likely to drop significantly in the near future. In fact, some lenders are reacting by raising their mortgage rates slightly. To understand the implications for your mortgage, it’s worth consulting with a qualified broker.” - Jason McDonald
Rising inflation causes uncertainty
The initial positive sentiment following the BoE's base rate cut to 4.25% was tempered by the subsequent announcement that the UK inflation rate has risen to 3.5%. It wasn’t totally out of the blue - many economic analysts had anticipated interest rates to rise due to expected widespread price increases.
Regulated increases in household bills such as energy, water and council tax took effect in April. Furthermore, the expected rise in the national minimum wage and employer National Insurance contributions likely prompted businesses to put their prices up too. This collectively contributed to the surge in inflation.
This is potentially unwelcome news for homeowners, as analysts now predict there’ll be a more cautious approach to base rate cuts throughout 2025. A slower base rate reduction could mean mortgage rates remain at a higher level for longer - a blow for those hoping to see further drops.
Although swap rates are still lower than this time last year, they have risen since last month. Some lenders have already started to increase their mortgage rates in response.
Mortgage product volatility
Mortgage rates fluctuated throughout May. Initial rate reductions from some lenders (including Yorkshire Building Society) were soon followed by announcements of increases from others (including Halifax, Nationwide and Santander).
Turbulent rate changes can make navigating the mortgage market tricky. If you’re considering a new mortgage or wanting to remortgage, you may find it beneficial to speak to a mortgage broker to discuss your options.
Help for first-time buyers
Net mortgage approvals for house purchases have shown a slight decline in recent months, suggesting potential challenges for homebuyers, particularly first-time buyers, in meeting lenders’ affordability criteria.
In response, some lenders, including Barclays, NatWest, Santander and Lloyds Banking Group, have recently relaxed their affordability rules to enable customers to borrow more.
Further support for homeowners may be on the horizon from the Financial Conduct Authority (FCA). The organisation published a speech on mortgage reform in early May, with a discussion paper planned for the following month. There will likely be a focus on how the industry can support first-time buyer financing, later life lending and improved access to mortgages.
April Mortgages and Gable Mortgages have both brought fixed-rate 100% mortgages to the market recently, too. These products give first-time buyers the opportunity to get their foot on the property ladder with no deposit. It's important to note that 100% mortgages carry a higher risk of negative equity and may come with less favourable interest rates. It could be worth consulting with a mortgage broker if you’re considering a 0% deposit option.
Housing market trends
According to Zoopla, buyer demand has slowed over the last few months, while the number of properties up for sale has increased. This is leading to house price growth slowing as a result, which could be positive news for first-time buyers and those looking to move.
It’s still worth noting that homes remain 3.4% more expensive than they were a year ago, according to Nationwide. That said, those looking to sell in the coming months should still carefully consider pricing their property fairly and competitively in order to avoid being overlooked by buyers who may now have a wider selection of homes to choose from.
It’s anticipated that home buying activity will pick up again in the summer months.
What’s coming up
The Bank of England’s Monetary Policy Committee convenes again on Thursday 19 June. Given the rising inflation rate, with further increases predicted, it’s widely expected that the committee will vote to maintain the base rate at 4.25%.
Should the base rate remain unchanged, mortgage rates are also expected to remain relatively stable too. While all homeowners hope for falling rates, stability can still be viewed as a positive outcome.
April 2025 Mortgage News: This month in mortgages
Swap rates fell in April 2025. As a result, some lenders have reduced their rate offerings - great news for both homeowners and prospective buyers
Inflation fell to 2.6% in March. This was an unexpected dip in inflation, and the Office for Budget Responsibility predicts inflation to rise to 3.7% in Q3 2025 which may stall more significant mortgage rate drops.
The next base rate announcement will happen on 8th May. Industry experts expect the Bank of England (BoE) to reduce the base rate to support economic growth, which would have an immediate impact on those with certain types of variable-rate mortgages.
US trade tariffs caused unexpected shockwaves across the global economy. The impact this will have on the UK economy is still unknown, though it is thought that UK growth may be impacted in the long term.
“Swap rates fell in April and the Bank of England base rate cut is highly likely on the 8th May. This is great news for homeowners and buyers - particularly those on variable-rate mortgages or those coming to the end of a fixed-rate deal as the impact will be much more immediate.” - Laura Hamilton, Mortgage Expert
How will economic changes affect my mortgage rates?
The short answer is this: no one knows. The market is still volatile. However, it is thought that mortgage rates will start to gradually come down over the next year or so as the Bank of England base rate falls.
Inflation
Inflation unexpectedly fell to 2.6% in March, fuelling further speculation that the BoE will reduce the base rate in May. However, inflation is thought to increase in the coming months. It is expected to hit 3.6% when the most recent inflation data is published. This, understandably, means lenders are being cautious not to drop mortgage rates too suddenly or swiftly.
Swap rates
Swap rates fell in April 2025. For example, the 2-year SONIA swap rate was 3.621% on 28 April 2025 compared to 3.993% on the same day in March. This is thought to be partly as a result of the US trade tariff announcement, the persistence of inflation and stalling economic growth leading markets to anticipate the Bank of England will need to take action to lower rates and support growth.
Lower swap rates have led to several lenders reducing their mortgage rates in recent weeks. Though this is welcome news, it is not a definitive sign that rates will continue to fall. For example, when it comes to fixed-rate mortgages, many lenders may have already factored in predicted cuts when pricing their current rates so even if the base rate does fall in May there are no guarantees that mortgage rates will come down further.
Mortgage product changes
A number of lenders (including Barclays, NatWest, Halifax and Nationwide Building Society) announced rate cuts across a number of products in April. There is now a much wider selection of sub-4% mortgage options on the market. So, if you’re looking to get a mortgage or it’s time to remortgage, it’s worth talking to a broker to discover what options are available to you.
In other news, Santander loosened its affordability rules to enable customers to borrow more, a positive sign for first-time buyers struggling to get on the property ladder.
April Mortgages also announced they are offering those opting to fix for 10 or 15 years the option to borrow up to seven times their annual salary. This slightly controversial option caught the headlines, but it’s worthwhile speaking to a qualified broker to discuss which mortgage products might be most suitable for you.
Housing market news
Mortgage completions rose by 50% in March as buyers rushed to avoid increased stamp duty costs.
However, the annual rate of house price growth in March remained unchanged from February at 3.9%. This was expected as buyer demand tempered following the new Stamp Duty changes coming into play at the end of March which, effectively, makes moving house more expensive for many buyers.
Experts still predict a busy summer, with more sellers expected to enter the market in the coming months (the number of homes for sale is already 11% higher than this time last year). House price inflation is, however, set to slow. This is great news for first-time buyers and home movers, who are likely to have plenty of choice when looking for their dream home.
What could be coming up in May
The big announcement to look out for next month is the Bank of England interest rate decision on Thursday 8th May. It is widely anticipated that the Monetary Policy Committee will vote to drop the base rate to 4.25%, though there are no guarantees this will be the case.
If the base rate does fall, though, we’re likely to see lenders continue to lower mortgage rates. This will have a much more immediate effect on your monthly payments if you have a tracker-rate mortgage because your interest rate is directly linked to the BoE base rate. However, it’s also good news for prospective buyers and those coming to the end of their fixed deals, as the rates available on the market are likely to be more competitive than they were a few years ago.
March 2025 Mortgage News: This month in mortgages
The Bank of England announced they would hold the base rate at 4.5%
The Chancellor delivered the Spring Statement. Though no mortgage-related fiscal changes were announced, government documents stated that they will be looking at options for an ISA reform
March was a busy month for the financial markets, with both a Bank of England (BoE) base rate announcement and the government’s Spring Statement happening within a week of each other.
For homeowners, there are no immediate causes for concern. The BoE kept the base rate at 4.5% as largely predicted and the Spring Statement provided more of an overview of the UK’s economic outlook rather than an opportunity for the Chancellor to announce major fiscal changes.
However, it’s well worth taking note of the latest figures around the country’s economic performance, even if we’re unlikely to see substantial immediate changes to mortgage rates as a result:
The Office for Budget Responsibility halved their growth forecast for 2025 from 2% to 1%
The UK economy shrunk by 0.1% in January but grew by 0.1% in February
Inflation rate has not lowered significantly, now standing at 2.8%. It’s predicted that inflation will rise to an average of 3.2% in 2025 but will fall to 2.1% in 2026. The OBR predicts inflation will meet the BoE’s 2% target from 2027 onwards
The Chancellor committed to house building reaching a 40-year high, with 1.3 million homes being built over the next five years - some analysts predict that this may lead to lenders prioritising new build mortgages and potentially even tweaking criteria in this area
Swap rates have remained fairly flat since early February, meaning it’s unlikely that mortgage rates will reduce further until we see further movement.
In terms of housing market news, Zoopla announced that there are 11% more homes for sale compared to this time last year. As a result of this, and the impending Stamp Duty changes, house price growth fell from 1.9% in January to 1.8% in February - with experts predicting house price growth to slow slightly further throughout the spring months.
However, when looking at year-on-year property prices, Office for National Statistics figures show a 4.9% increase in the year to January 2025 which may be encouraging news for those looking to put their property on the market.
Look out for Stamp Duty changes coming into effect on 1st April, though only time will tell what impact this will have on the housing market long-term.
February 2025 Mortgage News: This month in mortgages
The Bank of England delivered the first base rate announcement of 2025, cutting the base rate from 4.75% to 4.5% on 6 February 2025
In response, several lenders dropped their mortgage rates throughout the month
Some mortgage rates dropped below 4% - though one of these deals was short-lived
Early February brought good news for homeowners as the Bank of England cut its base rate to 4.5%. Further swift and significant base rate drops are thought to be unlikely, though, as inflation rate rose to 3%. Financial experts are now forecasting just two more rate cuts in 2025, which is likely to be reflected in conservative mortgage rate decreases.
Sub-4% mortgage rates hit the market again in February, with Santander and Barclays first to announce mortgage deals with interest rates below 4%. Unfortunately Santander was quick to withdraw its competitive 3.99% five-year fixed-rate deal, though its two-year 3.99% fix remains available at the time of writing (24th February 2025). This could signal that homeowners may have to wait until mortgage rates fall more significantly.
Swap rates fell in early February but did start to nudge up as we continued through the month, which also resulted in mortgage rates starting to rise slightly. This could prompt lenders to approach mortgage rate changes more tentatively going forward.
The housing market is still looking healthy, with buyer demand up 13% YOY as buyers rush to complete before the new Stamp Duty changes come into effect from April.
Stats also show that 2025 may well be the year for remortgagers, as instructions for remortgages increased by 31% according to LMS. Many homeowners took out 5-year fixed-rate deals in 2020, while in 2023 many opted for a two-year fix instead as rates began to rise. That suggests 2025 could be a busy year as savvy homeowners look to lock in their next fixed-rate deal.
January 2025 Mortgage News: This month in mortgages
We saw just two Bank of England base rate cuts in 2024. While it’s still uncertain whether there’ll be a base rate drop on 6 February, financial experts do predict that rates will be cut at least twice throughout 2025
2025 should be a year of strong growth for the housing market, particularly over the next three months as buyers push to complete their purchases ahead of the new Stamp Duty changes coming into force on 1 April 2025
In other news, the FCA announced it will review ways to simplify lending rules, which could be a great support to first-time buyers
2025 has started on a steady note, with mortgage rates remaining fairly stable throughout January. However, some lenders, including Virgin Money, have recently increased the cost of certain fixed-rate mortgages as swap rates edge up. Meanwhile, speculation around Santander potentially exiting the British market hit the headlines earlier in the month. The review is at an early stage and Santander has stated that the UK remains a core market, so this news shouldn’t cause any anxiety for customers just yet.
With just two Bank of England base rate cuts in 2024, many homeowners are hopeful for further reductions this year. It’s uncertain whether there’ll be a base rate drop at the next announcement on 6 February 2025, though. Financial experts now predict that rates will decrease more gradually throughout the year following the government’s October Budget but the Spring Budget in March 2025 could shift market expectations once again.
It’s still worth starting to shop around for the best mortgage deals if you’re due to remortgage soon, though. We’re seeing a lot of mortgage rate volatility so locking in a deal now could provide peace of mind. And, don’t worry, if you find a better rate before your current fixed-term deal ends, you can always switch again.
In positive news, the Financial Conduct Authority (FCA) has announced it will investigate ways to simplify lending rules which could potentially enable home buyers to borrow higher amounts. This could be a game-changer for first-time buyers struggling to get on the property ladder.
Early indicators suggest 2025 will be a year of strong growth for the housing market. According to Nationwide, the average property price was up 4.7% year-on-year in December.
Buyers in England and Northern Ireland are likely pushing to complete purchases before the new Stamp Duty changes come into force on 1 April 2025, which could add thousands to the cost of moving. We’ll have to wait and see what impact the changes will have on the housing market long-term but, for now at least, sales will likely increase and we’ll see a more competitive housing market as a result of this higher demand.
18 April 2024: This week in mortgages
Again a fairly static week for average rates, lenders both increasing and decreasing their deals have likely maintained this balance. Whereas Santander and TSB have both made reductions on some of their fixed-rate options, Bank of Ireland have increased some of theirs. Virgin Money, on the other hand, has both reduced some deals and increased others in their range.
While recent speculation was that the base rate would fall in June, many experts believe it could now be August, or even later when we finally start to see the base rate, and therefore, mortgage rates fall. This is largely due to ‘sticky inflation’ with only a small drop announced yesterday (from 3.4% to 3.2%), which it seems, has already impacted swap rates.
This is likely to result in increased mortgage rate volatility in the coming weeks, so be sure to lock in favourable deals quickly, if you’re looking to remortgage soon. You can always switch deals again before your current fixed-term date ends, should you find something better by then.
House prices seem to be following inflation and interest rate trends, and show minimal signs of a dramatic fall. ONS (The office for national statistics) reported that the average UK property price fell by 0.2% in the 12 months since February 2023, but has risen 0.4% in the first quarter of 2024.
It’s perhaps, therefore, unsurprising that according to mortgage statistics, one in five people surveyed by Censuswide believed they wouldn’t own a property until they were in their forties. Most people cited high deposit requirements and mortgage affordability as the reason for this. However, there are more options than many people realise for first-time buyers looking to begin their home ownership journey, so be sure to speak to a broker before ruling it out completely.
05 April 2024: This week in mortgages
This week, we've seen a number of major lenders, such as Halifax, Santander and HSBC, in cutting both two and five year fixed-rate deals, following March's inflation news and base rate announcement.
While rates remain higher than many prospective buyers and remortgagers would want, the return of competition to the market has clearly had an impact on the industry to date, with the latest money and credit report from the Bank of England reporting that net mortgage approvals for both house purchase and remortgage are up in February. The report also highlights a fall in the effective interest rate on newly drawn mortgages to 4.50% - a decline of 0.29%.
99% mortgage product
Hitting the headlines this week, a new product from Yorkshire Building Society was launched with a set £5,000 deposit requirement. Aimed at first-time buyers, but not for use on flats or new-build properties, it potentially provides borrowers the option to borrow at 99% LTV (Loan to value). As the fee-free, £5000 deposit mortgage can be used on properties (up to) the value of £500,000, this would essentially make it 99% LTV if utilising the maximum borrowing. However, according to Zoopla, the average UK property is now £263,900 which would mean that a £5000 deposit would result in around 98% LTV borrowing.
Although this will be welcome news to many of those struggling to save a large deposit, do keep in mind the risks of borrowing at a high LTV, such as larger repayments and an increased risk of negative equity. If you plan to use a high LTV mortgage product, its' best to make monthly overpayments, where possible, to increase your equity more quickly.
19 March 2024: This week in mortgages
In the past week we’ve seen lenders continue to edge rates back upwards, ahead of the base rate announcement this Thursday (21 March). This is likely due to broad speculation across the industry that the Bank of England (BoE) will not reduce this base rate this time around. This will be unwanted news for the many homeowners with fixed-rate deals ending soon, many of whom are currently on rates of 3% or below, according to the Financial Conduct Authority.
Perhaps then, it’s a sign of the times that lenders are beginning to broaden their affordability criteria to help borrowers meet higher interest rate demands. For example, Santander has this week added Universal Credit as an acceptable secondary income source. We’ve also seen lenders, such as Halifax, extend their maximum age limits on mortgage applications.
Some economists expect the first BoE base rate cut to come in May of this year. However, with rates being pulled increasingly quickly again, it’s a difficult decision whether to remortgage now or wait it out to see if this rings true in May. The average standard variable rate is still above 8.5%, so if your deal’s end date is imminent, it’s best to speak to a mortgage broker asap.
13 February 2024: This week in mortgages
Rates news
The market has returned to a slightly more volatile position following the base rate decision at the beginning of this month. Since the Bank of England decided to hold at 5.25%, some lenders began slightly increasing their fixed-rate deals, largely on the assumption that the static base rate indicated rates staying higher for longer. Since then, swap rates have also begun to rise, meaning more and more lenders have reversed recent rate cuts, as the price of borrowing increased for them. In fact, in the past week we've seen many of the 'big six' mortgage lenders push up their fixed rate deals, with Nationwide also raising their tracker rates by up to 0.25%.
Mortgage arrears rise
UK Finance has reported on a rise in arrears across both residential and buy-to-let mortgages over the past few months. In the last quarter of 2023, it highlighted a 7% rise in residential, and an 18% rise in buy-to-let mortgage areas.
Shared-ownership council
A small group of industry firms have funded the creation of a council with the aim of providing “a more transparent and consistent service offer for consumers in shared ownership schemes”.
This is following a large increase in shared ownership property purchase in recent years, but a contrary fall in consumer satisfaction from those taking on this type of mortgage and purchase.
Dutch-style mortgages hit the UK
New UK mortgage lender, April Mortgages, has raised interest in the industry with the introduction of their 'Dutch-style' mortgages. The firm, which is part of a broader Netherlands based group, DMFCO, currently only offers this option for remortgage customers, but plans to expand into the purchase market in April.
A 'Dutch-style' mortgage is so-named due to mimicking how many longer term fixed rate deals work on the continent. As well as offering longer fixes than the two and five year products typically offered in the UK, the interest rates reduces automatically in line with your LTV (loan-to-value) as you repay your loan. This reduces the need for frequent remortgages for many borrowers, saving both time and money.
01 February 2024: Base rate announcement
The Bank of England (BoE) took the decision to hold the base rate of interest at 5.25% today, in their first decision of 2024. This has now been held at the current rate since September 2023, with the last change made in August 2023 when it rose to 5.25%, a 16-year high. Despite maintaining this rate for a few months, many financial forecasters expect the BoE's monetary policy committee (MPC) to make cuts to the base rate later in the year, given the significant fall in inflation over the past few months.
Does this mean mortgage rates will fall?
Due to expectations of cuts later in 2024, many mortgage lenders had already begun reducing their rates ahead of today's announcement. Both big six lenders, such as Halifax and HSBC and a number of building societies have reduced their fixed-rate deals multiple times throughout January. Some now have selected products available at around 4%, and even slightly below that in certain circumstances.
However, it remains to be seen whether there will be further cuts to mortgage rates in the coming days as a result of today's decision. Some economists are predicting that the base rate won't fall until May or June, however, London Stock Exchange Group data shows that the base rate is largely expected to fall an entire percentage point, down to 4.25%, by the end of 2024.
Should I remortgage now or wait for further rate reductions?
As ever, when it comes to mortgages, it depends on your current circumstances. If rates and inflation continue to travel in their current direction, it's perfectly possible that lenders will be offering lower rates as a results than they are today, before the end of 2024.
However, if you're already on your lender's SVR (standard variable rate) and don't intend to move home any time soon, is it worth paying a considerably higher rate whilst you anticipate a reduction that is as yet uncertain?
The average SVR in the UK at the moment is still fairly high, at 8.74%, so if you've got a high mortgage balance, this could be having a real impact on your affordability. Especially when some of the better fixed and variable rate deals available at the moment are around half of that.
15 January 2024: This week in mortgages
Mortgage lenders are divided this week, as an increase in swap rates seems to have caused some lenders to reprice their recently reduced deals, whereas others are either holding fast with the rates announced in the previous weeks, or even making further reductions.
HSBC, for example, has committed to cut prices across some of their two, three and five-year fixed rate deals for both product transfers (including those wanting to increase their borrowing) as well as new customers, tomorrow (16 Jan). Co-op, on the other hand, pulled some of their recently reduced rates today - mostly those below 4% - and are repricing them to take into account recently fluctuating swap rates.
This sort of behaviour typically indicates that tougher competition is returning to the mortgage market, meaning it's even more important to compare mortgage deals, whether you're looking to remortgage or buy a new property.
Mortgage term increases
According to a report by Bowmore Financial Planning, 2023 saw a 13% increase in people taking out mortgages with terms longer than 30 years. This is a likely impact of the rising cost in monthly payments caused by the rate increases seen over 2022 and 2023.
While rates do now seem to be falling again, combined with other factors, such as a higher general cost of living, and rising property prices, affordability is tight for many taking out mortgages and remortgages in 2024. Extending the mortgage term can help to increase mortgage affordability, however, it does also increase the amount of interest you'll pay overall, the longer the mortgage term is.
Landlord news
According to a report by Hampton's Letting agency, a record number of landlords set up SPVs (Special purpose vehicles) to manage their buy-to-let portfolios in 2023. This is even more prominent given that the number of properties bought for BTL purposes fell in 2023.
While the popularity of limited company buy-to-let begun to increase back in 2016, following a change to the tax rules around claiming back landlord related costs, large increases in mortgage repayments those landlords remortgaging have seen over the past year has likely spurred on this activity.
There are a range of tax benefits to operating a rental portfolio as a business, rather than an individual. However, limited company purchase won't suit everyone, so it's a good idea to speak to a mortgage broker with knowledge and expertise in the buy-to-let market before going down this path.
08 January 2024: This week in mortgages
It's been a fairly positive start to the year in terms of mortgage rates, with many more rate cuts seen across both residential and buy to let mortgage deals, and an increase in the deals available overall to a 15 year high.
Some of the bigger lenders, such as NatWest have launched remortgage rates as low as 4.64% for a 2 year fixed-rate mortgage deal at 60% LTV via a broker. Today we've also seen smaller and more specialist lenders follow suite, with Virgin Money offering 2 year fixes as low as 4.57% at 65% LTV and 6.97% at 90% LTV.
While some economists are warning that the Bank of England (BoE) won't make any cuts to the base rate until 2025, an extensive survey carried out by the Times suggests that the majority (42.5%) now feel that at least 2 base rate cuts will be seen in 2024. The BoE has also released promising data suggesting that the market is recovering, with their December Money and Credit Report highlighting an increase in net remortgage approvals for from 24,000 in October to 27,000 in November.
Help for first time buyers
However, according to Yorkshire building society, it's not all positive news. They reported a decline in first-time buyer mortgages of a fifth in 2023 compared to the previous year - making it the lowest number since 2013.
While the Tory's have hinted at additional help for first-time buyers ahead of the election, at the moment, we are yet to see any progress beyond the extension to the mortgage guarantee scheme. That said, rates are falling, so if you're currently looking to take your first step onto the property ladder, it's worthwhile speaking to a broker, like our partners at Mojo mortgages, to see what's available to you.
