UK mortgage rates have crept back up to where they stood a month ago, as renewed tensions in the Middle East filter through to the cost of borrowing. As your local property experts, here is what is behind the rise and what it could mean for your plans.
Lenders’ funding costs have increased after fresh strikes and attacks on oil tankers in the Red Sea reignited fears over global energy supplies. Oil prices passed 100 dollars a barrel this week for the first time since May, and that is feeding through into how banks price their mortgage deals. The five biggest High Street lenders are among those to have raised rates on new fixed deals in recent days, with around 100 deals pulled temporarily while lenders reconsider their pricing.
More than eight in ten mortgage customers are on fixed rate deals, meaning their rate stays the same until it is time to remortgage, usually after two or five years. The average two-year fixed rate now sits at 5.58%, with the average five-year fixed rate at 5.6%. That is still below the peak seen in April during the Iran conflict, but it undoes several weeks of gradual improvement. Moneyfacts finance expert Rachel Springall described the situation as incredibly frustrating for borrowers, adding that the market now needs a period of stability. Brokers agree the recent run of rate cuts looks to have stalled for now.
For anyone with a deal ending this year, the message is simple: do not wait and hope for rates to fall further. It is worth locking in a new rate with your existing lender ahead of time as a safety net, then asking a broker to check whether a better deal is available elsewhere before you commit.
We keep a close watch on mortgage market movements like this so you do not have to, and we are always happy to talk through what it means for your own plans. Get in touch with your local Drivers & Norris branch today.
Source: BBC News
— Drivers & Norris