In the wake of the Bank of England’s recent decision to maintain its base rate at 5.25%, the UK mortgage market has experienced a wave of volatility. Lenders have swiftly responded by adjusting their fixed-rate deals, anticipating prolonged stability in interest rates. Most people expected rates to probably stay the same, but most of us did not expect to see a rates surge. This shift, alongside other industry developments, is shaping the landscape of mortgage borrowing in the UK. Here’s a comprehensive overview of the latest trends in mortgage rates and market dynamics, according to insights from Uswitch money expert Kellie Steed.
Market Volatility Spurs Rates Surge
Following the Bank of England’s decision, several lenders have opted to increase their fixed-rate deals. This move is primarily driven by the expectation of sustained higher rates in the foreseeable future. The rise in swap rates further compounded this trend, prompting many lenders, including major institutions like Nationwide, to reverse recent rate cuts. The result? A notable uptick in fixed-rate deals across the board, reflecting lenders’ response to evolving market conditions.
Mortgage Arrears on the Rise Due To Rates Surge
UK Finance’s latest report sheds light on a concerning trend in mortgage arrears, affecting both residential and buy-to-let properties. The fourth quarter of 2023 witnessed a 7% increase in residential mortgage arrears and a substantial 18% surge in buy-to-let arrears. This development underscores the financial challenges faced by homeowners and property investors, potentially signalling broader economic pressures.
Initiative for Shared-Ownership Transparency
In response to growing dissatisfaction among consumers in shared-ownership schemes, a consortium of industry firms has initiated the establishment of a council. This council aims to enhance transparency and consistency in shared-ownership offerings, addressing concerns raised amidst a surge in shared-ownership property purchases. The move signifies a proactive effort to improve the mortgage experience for shared-ownership participants and bolster consumer confidence in this segment.
Introduction of Dutch-Style Mortgages
April Mortgages, a new player in the UK mortgage market, has introduced ‘Dutch-style’ mortgages, garnering significant industry attention. Modelled after longer-term fixed-rate deals common in continental Europe, these mortgages offer extended fixed periods and automatically adjust interest rates in line with loan-to-value ratios. This innovative approach promises greater convenience for borrowers, potentially reducing the need for frequent remortgaging.
Key Insights into Average Mortgage Rates
According to the latest data from Uswitch, average mortgage rates across major lenders have witnessed fluctuations:
Here are the average mortgage rates across the big six lenders as of February 13th 2024:
- Two-year fixed-rate mortgage (75% LTV): 4.74%, up by 0.05% from last week and down by 0.085% from last month.
- Five-year fixed-rate mortgage rate (75% LTV): 4.39%, up by 0.05% from last week and down by 0.1% from last month.
- Two-year variable-rate mortgage rate (75% LTV): 5.74%, no change reported.
- Two-year fixed-rate mortgage (90% LTV): 5.35%, down by 0.08% from last week and down by 0.365% from last month.
- Standard variable rate (SVR): 7.5%, no change reported.
These rates are based on data from Nationwide, Santander, HSBC, Halifax, Barclays Bank, NatWest, and Lloyds Bank.
Average UK Mortgage Rates
Here are the average residential mortgage rates as of February 13th 2024:
- Two-year fixed-rate mortgage (75% LTV): 5.59%, up by 0.04% from last week and down by 0.15% from last month.
- Five-year fixed-rate mortgage rate (75% LTV): 5.11%, up by 0.02% from last week and down by 0.28% from last month.
- Two-year variable-rate mortgage rate (75% LTV): 5.89%, up by 0.02% from last week and down by 0.01% from last month.
- Two-year fixed-rate mortgage (90% LTV): 5.56%, down by 0.04% from last week and down by 0.05% from last month.
- Standard variable rate (SVR): 8.74%, no change reported.
Average UK Buy-to-let Mortgage Rates
Here are the buy-to-let mortgage rates as of February 13th 2024:
- Average two-year fixed buy-to-let rate (75% LTV) across all lenders: 5.64%, up by 0.05% from last week and down by 0.25% from last month.
- Average two-year fixed buy-to-let rate (75% LTV) across big six lenders: 5.28%, down by 0.01% from last week and down by 0.1% from last month.
- Lowest two-year fixed buy-to-let rate (75% LTV) across all lenders: 3.6%, offered by MT Finance, down by 0.49% from last month.
- Lowest two-year fixed buy-to-let rate (75% LTV) across big six lenders: 4.64%, offered by NatWest, down by 0.1% from last month.
Lowest UK Mortgage Rates
Here are the lowest mortgage rates across various categories as of February 13th 2024:
- 5-year fixed rate (75% LTV) across all lenders: 4.01%
- 2-year fixed rate (75% LTV Residential) across all lenders: 4.79%
- 2-year fixed rate (75% LTV Residential) across big 6 lenders: 4.3%, down by 0.02% from last week.
- 2-year variable rate (75% LTV Residential) across all lenders: 4.3%, down by 0.02% from last week.
- 2-year fixed rate (90% LTV Residential) across all lenders: 4.89%
- 2-year fixed rate (90% LTV Residential) across big 6 lenders: 4.89%
Speak To a Mortgage Broker in 2024 To Get the Most Competitive Rates
To get the best mortgage rates and products in 2024, you must seek the help of a qualified whole of market mortgage advisor such as ourselves at Oportfolio. Having access to a variety of mortgage lenders with broker exclusive products allows you to get the best possible mortgage deal according to your own circumstances. Call or email our team today to arrange a fee free initial mortgage consultation. Avoid unexpected rates surge by securing a great deal with our team.
