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Mortgage Rate Predictions UK

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Interest rates are going up at the moment, with more rate rises predicted. But how does this affect mortgages? We are going to take a closer look at mortgage rate predictions in the UK.

If you have debts, such as a mortgage, rising rates means in general bad news. However, higher interest rates are actually good news for savers.

Nowadays you can get very easy a mortgage quote online. It saves you from researching numerous mortgage rates and products. You can also speak to an experienced adviser about your mortgage options. It only takes a matter of seconds – let’s get started.

Find Your Mortgage

Your property may be repossessed if you do not keep up repayments on your mortgage.

The Bank of England base rate currently sits at 2.25%. Rate hikes in December 2021 and February, March, May, June, August and September 2022 mean the bank rate is now at its highest for 14 years. Some experts foresee that mortgage rate predictions in the UK are going up even further.

The most recent rate rise from 1.75% to 2.25% meant borrowers with a £200,000 mortgage on a tracker at 3.5% would have seen their rate increase to 4% and their payments go up by £60 a month.

It’s all a far cry from when the base rate sat at an all-time low of 0.1% between March 2020 and December 2021 during the Covid-19 pandemic. The base rate was at 1% or less from February 2009 to May 2022. Meaning a whole generation of homeowners have not known anything other than super-low interest rates.

Even a small change in interest rates can have a big impact on your financial situation.

What is the base rate?

The Bank of England’s Monetary Policy Committee (MPC) meets eight times a year to set the base rate (or ‘bank rate’). This is the interest rate that banks and lenders pay when they borrow money from the Bank of England.

The base rate influences how much interest financial firms charge their customers for mortgages, loans and credit cards or pay on savings accounts. When the base rate goes up, the cost of borrowing goes up. In theory, when the base rate goes down, borrowing money gets cheaper.

The MPC is next due to meet on 3 November to set the base rate. It’s possible that an ‘emergency rate rise’ could happen sooner.

Will interest rates go up even more?

Whether the MPC meets before 3 November or not, it looks a certainty that interest rates will go up further, this year or next year.

The Bank of England is under pressure to raise rates in a bid to curb surging inflation. It currently sits at 9.9%, almost its highest level in 40 years, against a target of 2%. Putting up rates makes it more expensive to borrow money and incentivises people to save as a result. Less people buying things reduces demand for goods and services and should subsequently reduce their prices, bringing down inflation.

Experts forecast that interest rates could reach 5.5% or even higher by next spring. Prompting many mortgage lenders to withdraw mortgage deals because of the lack of certainty on how high rates could rise.

However, whether you’re a first-time buyer or second time buyer, there are still mortgage deals out there that could be of interest to you. Use our recommended mortgage advisers’ comprehensive mortgage-in-principle tool to see your borrowing potential.

Mortgage in Principle

Your property may be repossessed if you do not keep up repayments on your mortgage.

Will mortgage rates go up?

At the moment, mortgage rates are going up and in general there are less mortgage products to choose from.

According to a large UK financial information company, in the first week in October alone, the number of available mortgage products dropped from 3,961 to 2,371, equating to just over a 40% drop in availability.

In addition to the drop in choice, average rates have shot up. The average two-year fixed rate now stands at 6.11%, while the average five-year rate is 6.02%. Average rates for these mortgage products were last above 6% in 2008 for two-year and 2010 for five-year fixes.

Our recommended mortgage advisors have access to an extensive range of mortgage products, with more than 12,000 different mortgage deals from the 90 top lenders.

Speak to a mortgage broker

Mortgage rates and mortgage rate predictions in the UK are currently changing on a daily basis. Many of the mortgage products that have been withdrawn are likely to be replaced with more expensive products.

If your fixed rate mortgage is due to end in the next six months. Speak to a broker about locking in a new rate now before rates go up even more.

If you’re on a variable rate mortgage and are worried about increasing monthly payments, a broker can help you switch to a fixed rate.

If you’re in the process of buying your first home, mortgage rates will impact how much you can afford to borrow.

The most important thing is not to panic. Mortgage brokers can help you navigate the current mortgage situation and make the right decision for your circumstances.

Mortgage Quotes

Your property may be repossessed if you do not keep up repayments on your mortgage.

Last Updated: October 14th, 2022

Phil Spencer

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