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Rising Mortgage Rates in the UK

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Rising Mortgage Rates in the UK
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Homeowners in the UK are facing an ongoing battle to meet the monthly repayments on their mortgage. With interest rates continuing to increase, primarily due to rising inflation, the ‘cost of living’ in the UK is in the most difficult position it has been in for years.

Mortgage rates in the UK are persistently rising, too. So, if you are wondering why this is happening, and whether you can expect them to go down soon, then keep reading our blog below. We have answered both of these important questions, and more, so you are well informed about what the future looks like for property owners in the UK.

Current interest rates in the UK

The current interest rate in the UK is 5.25%. This figure is set by the Bank of England and has a significant impact on any homeowners’ ability to meet their monthly mortgage payments. It is possible that this figure will rise even further, with some economists predicting that interest rates will reach 5.75% by Spring 2024.

Inflation in the UK

Throughout the summer of 2023 and early autumn, the rate of inflation in the UK has slightly eased. The Bank of England is continuing to increase interest rates to try to slow down the rate of inflation. This appears to have worked throughout the summer of 2023, as the rate was 6.8% in July, which was down from 7.9% in June.

Why are mortgage rates rising? 

The Bank of England is attempting to slow down the rate of inflation, and many banks’ mortgage rates are rising in response to this. Increasing interest rates helps to slow down inflation, because individuals are encouraged to save more money, and therefore spend less, which reduces the rate of inflation.

Current mortgage rates in the UK

According to HSBC, one of the largest mortgage lenders in the UK, the current mortgage rates are as follows:

60% Loan to Value

  • 2 Year Fixed Standard: 5.89% fixed rate, followed by a 6.99% variable rate
  • 3 Year Fixed Standard: 5.79% fixed rate, followed by a 6.99% variable rate
  • 5 Year Fixed Standard: 5.25% fixed rate, followed by a 6.99% variable rate

70% Loan to Value

  • 2 Year Fixed Standard: 5.93% fixed rate, followed by a 6.99% variable rate
  • 3 Year Fixed Standard: 5.84% fixed rate, followed by a 6.99% variable rate
  • 5 Year Fixed Standard: 5.25% fixed rate, followed by a 6.99% variable rate

75% Loan to Value

  • 2 Year Fixed Standard: 5.93% fixed rate, followed by a 6.99% variable rate
  • 3 Year Fixed Standard: 5.84% fixed rate, followed by a 6.99% variable rate
  • 5 Year Fixed Standard: 5.25% fixed rate, followed by a 6.99% variable rate

80% Loan to Value

  • 2 Year Fixed Standard: 6.04% fixed rate, followed by a 6.99% variable rate
  • 3 Year Fixed Standard: 5.94% fixed rate, followed by a 6.99% variable rate
  • 5 Year Fixed Standard: 5.41% fixed rate, followed by a 6.99% variable rate

85% Loan to Value

  • 2 Year Fixed Standard: 6.09% fixed rate, followed by a 6.99% variable rate
  • 3 Year Fixed Standard: 5.99% fixed rate, followed by a 6.99% variable rate
  • 5 Year Fixed Standard: 5.41% fixed rate, followed by a 6.99% variable rate

90% Loan to Value

  • 2 Year Fixed Standard: 6.24% fixed rate, followed by a 6.99% variable rate
  • 3 Year Fixed Standard: 6.09% fixed rate, followed by a 6.99% variable rate
  • 5 Year Fixed Standard: 5.64% fixed rate, followed by a 6.99% variable rate

95% Loan to Value

  • 5 Year Fixed Fee Saver: 5.99% initial interest rate, followed by a 6.99% variable rate

Will mortgage interest rates go down soon?

It is currently unclear whether interest rates will decrease throughout the final months of 2023, and the early months of 2024. Many economists expect that the interest rates will continue to increase slightly during this period, and that this will have a knock-on effect for mortgage interest rates, too. However, there has also been reports of lenders such as Nationwide, Santander and HSBC cutting their mortgage rates throughout the middle of 2023. It therefore remains unclear what the short-term future holds.

In the long-term, it is generally expected that mortgage interest rates will decrease over the next few years, in comparison to current levels.

Is now a good time to invest in property?

Most property experts and economists agree that now is not the best time to invest in property, compared to in a few years time when mortgage rates and interest rates are expected to go down. In these later years, it will be slightly more affordable to secure a mortgage, so if you can wait a bit longer, you are likely to get a better deal.

Will house prices drop in 2024?

Different properties experts have varying opinions on what will happen to house prices in 2024. Some expect prices to decrease significantly, while others say that the majority of areas in the UK will continue to see an increase in value.

You should pay attention to local property prices in your area and try to get information on what different houses are selling for as the months go by. The selling price of a similar property to yours, in the same area, will be a good indication of what yours might sell for. You can then compare this figure to your initial buying price, to see what kind of profit could potentially be made.

Sell to a cash house buyer

With the UK economy in a current downturn, potential homebuyers have less available cash to purchase properties with. This means that, in the current market, you would receive less for your house than you might do in an ‘upturn’.

Lots of homeowners are also struggling to make their monthly mortgage repayments. In this instance to prevent repossession, you should research how the government can help with your mortgage – and, failing that, you may choose to cut your losses by selling to cash house buyers.

Contact We Buy Any Home today for a free, no-obligation valuation of your house.

Free cash offer within minutes, any condition, any location.

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