In the week leading up to and in the immediate aftermath of the Bank of England’s latest base rate rise, the UK mortgage market unfortunately saw more mortgage rate rises that mortgage rate reductions. On the 11th of May the UK’s central bank the Bank of England announced that they would be raising the base rate again a further 0.25% so that the base rate now sits at 4.50%. The highest it has been in 15 years and the 13th consecutive rise.
Mortgage Rate Rises Or Reductions?
Despite the previous few base rate rises, mortgage interest rates have generally seen rate reductions rather than rate rises, however it seems that this final most recent change to the base rate has left lenders feeling a bit more nervous than they previously were. After the disastrous mini-budget announced by former chancellor Kwasi Kwarteng at the end of 2022, most mortgage lenders immediately and unjustifiably pushed their rates to 6, 7 and even 8%. The main reason for this being that they got scared by the initial reaction of the Bank of England and massively overinflated their rates to ensure that they would still make a profit.
However it soon become clear that this was not needed at all and lenders began to cautiously lower their rates again. It took a few months but over the last couple of moths we began to see more sub-3% mortgage products re-entering the market and all things pointed towards this figure dropping even more, much sooner than people anticipated. However, when the Bank of England announced that inflation was not falling at the rate that they anticipated, most lenders fingers began to twitch. As it became more and more clear that the bank would probably increase the base rate again, lenders started to push up their rates again with most product being between 4 and 6%. Here is a breakdown of some of the major rate rises this week so far:
Rate Rises This Week
Many mainstream mortgage lenders changed their rates this week. Lenders such as Barclays, HSBC and Virgin Money all jumped on the bandwagon. Lender Aldermore raised rates by up to 0.45% across their product offering. Lender Platform increased their rates by up to 0.35%, as did Clydesdale Bank whose products increased by up to 0.31%.
TSB also increased selected fixed rates by up to 0.30% but also offered some rate reduction of up to 0.20% on selected products too. Santander increased rates by up to 0.22%, NatWest and RBS also made increases, but only up a 0.17% rise, a fairly small change in comparison to other lenders.
When Will Rates Come Down?
Hopefully this last base rate increase will be the last in a while and we should see both inflation and the base rate start to come down soon, but when exactly this will happen is unclear. The Bank of England remains confident that the measures they are implementing will work and that is really all we can hold on to at the moment. When the base rate drops, we should see lenders start to rapidly reduce their rates as lenders are hungry to lend. It is also important to remember that not all lenders have increased their rates at the moment and a mortgage advisor can still help you to get a very competitive secure product. If you are interested in getting a new mortgage, give our team a call today to see how we can help.
