close
close

Le-verdict

News with a Local Lens

    • Mortgage rates rise on concerns over budget impact | Personal Finance | Finance
    minsta

    Mortgage rates rise on concerns over budget impact | Personal Finance | Finance

    Pabio Posted on

    Some financial giants have started to increase the cost of new home loans, fearing the Budget could mean the UK faces a hike. interest rate than expected.

    Skipton Building Society and Coventry Building Society have both announced rate increases from next week following predictions that the Budget would lead to higher inflation and interest rate than previously planned.

    City experts predicted the Bank of England would cut its key rate twice before Christmas, but many now say there will probably only be one at most.

    At the same time, the so-called swap rates, which are the interest rate that financial institutions use to lend to each other, have increased, which will result in more expensive fixed-rate mortgages.

    Virgin Money was the first to increase its rates by up to 0.15 percentage points, while Halifax increased some rates and reduced others.

    The Office for Budget Responsibility said it now expects the Bank of England’s base rate to fall from its current figure of 5% to 3.5% by 2029, or around 0, 5 percentage points higher than its March forecast and 0.25 percentage points higher than before the budget. .

    The OBR also predicts that the average mortgage the rate would rise from 3.7 percent in 2024 to 4.5 percent in 2027. The five-year average rate on Thursday was 5.09 percent, while the two-year rate was 5.39 for hundred.

    The Bank of England will meet next week to vote on interest ratecurrently at 5% and the bet on an immediate reduction has gone from a probability of 95 percent to 77 percent.

    Adrian Anderson, a mortgage broker at Anderson Harris, warned: “The general direction of movement over the next few weeks for fixed rate mortgages will be upwards. When banks reassess their rates next week, we will see increases for virtually all lenders.

    “It’s confusing for the consumer. The basic fact is that since the banks reacted to the Budget, the bond markets and gilts have not reacted well. Swap rates (the main pricing mechanism behind mortgage rates) have increased quite significantly. The base rate will continue to fall, but probably not as quickly. There will be a few more mortgage pain for a little longer.

    David Hollingworth, of L&C Mortgages, told the Telegraph: “It’s a confusing time for mortgage borrowers as the base rate is expected to fall next week, but fixed rates look set to rise.

    “If market rates remain at current levels, it seems inevitable that more lenders will have to rethink their rates. It’s not about the radical rise in rates that devastated mortgage rate over the past two years. But if financing costs don’t come down, the five-year fixed rates of less than 4% that we’ve become accustomed to in recent months could be at risk.

    “Borrowers currently considering a fixed rate option should act quickly to secure a deal, as we are seeing some rates opt out with very little notice.”

    Pabio
    View all posts

    You Might Also Like