Are mortgage rates going to cause households any more suffering?
Since Friday, mortgage rates have increased thanks to Nationwide Building Society.
The current state of the mortgage market and potential future rate movements are shown below:
– What has the mortgage market been experiencing lately?
In order to handle the volume of applicants, some lenders briefly pulled deals offered through brokers before later re-listing them for sale.
– Why have mortgage interest rates risen?
Some mortgages with variable rates immediately follow the Bank of England base rate and increase automatically in step with it. Twelve times in a row, the rate has increased.
When their initial mortgage contract expires, borrowers may also be placed on a standard variable rate (SVR). Although each lender sets their own SVR, it frequently follows base rate changes in broad strokes.
The majority of UK homeowners with mortgages often opt for fixed-rate agreements. Fixed-rate mortgage pricing is based on swap rates, which have been rising in line with predictions for inflation, which has proven to be more “sticky” than some had anticipated.
According to data from the Office for National Statistics (ONS), the Consumer Prices Index (CPI), a measure of inflation, increased by 8.7% in the 12 months leading up to April 2023.
Many homeowners have not yet felt the effects of recent rises in mortgage rates on their budgets because a sizable portion of them are still on fixed rates. This would exacerbate the financial strain already being felt by people due to a number of other bills, such as rising food prices.
The second half of this year will see the expiration of about 800,000 fixed-rate contracts, according to the industry group UK Finance.
What will happen to mortgage rates next?
What will happen to mortgage rates in the future is impossible to predict with certainty.
The next Bank of England base rate decision, though, is scheduled for next week, which is what we do know.
According to experts, there will likely be a 13th base rate increase, which might result in a 0.25 percentage point rate increase, bringing the base rate to 4.75%.
Fixed-rate mortgage rates have been rising for some time now.
According to the financial information website Moneyfactscompare.co.uk, the average two-year fixed-rate residential mortgage on the market was slightly under 6% on Friday.
What assistance is offered if I am having trouble making my payments?
Speak with your lender as soon as you can. They might be able to propose other ways to keep monthly payments more reasonable, though some, like extending the mortgage term, might entail paying more in the long run, so any choice should be carefully considered.
When your mortgage is about to expire, a broker can assist you in getting the best possible deal.