New figures on average UK mortgage rates released by Uswitch this afternoon show that some rates have increased by as much as 0.50% in a week. This latest shocking change, specifically to variable mortgage rates comes after several weeks of constant rate increases and a dramatic increase of the Bank of England’s base rate to 5%. However, it is not all bad news, despite the rate increases and decreasing lender affordability, mortgage approvals have actually increased over the last month.
Increase To Variable Mortgage Rates
As already mentioned, since the Bank of England raised the base rate to 5% in June 2023, 2-year variable rate mortgages have increased by up to 0.50% in a week alone. The figures from Uswitch show that the average 2-year variable mortgage rate has increased from 5.11% on the 22nd of June 2023 to 5.59% on the 29th of June 2023. A change of 0.48%. Out of the big six lenders (Nationwide, Santander, HSBC, Halifax, Barclays Bank, NatWest, and Lloyds Bank) the average variable rate had increased by 0.50% from 4.99% to 5.49%.
Increases To 2-Year Fixed Rate Mortgages
Uswitch also note that the average 2-year fixed rate mortgage has also increase by up to 0.11% in a week, from 22nd of June to the 29th June 2023. On the 22nd of June the average rate was 6.44% but is now 6.55%. The average rates across the big six lenders increased from 5.60% to 5.89%. An increase of 0.29%.
Increases To 5-Year Fixed Rate Mortgages
Finally Uswitch announced that an average of the entire mortgage market has actually seen rates for 5-year fixed rate mortgages remaining the same as last week at 5.79%. However, out of the big six lenders, rates have increased for five year fixed mortgages from 5.11% to 5.39%. A change of 0.28% in a week.
Mortgage Approvals Have Increased
Despite these obviously concerning rate increases, it isn’t all bad news. In recent months lenders have imposed tougher mortgage affordability and mortgage application criteria, making it harder for potential borrowers to get their mortgages approved. Recent data released by the bank of England shows that mortgage approvals have actually gone up over the last month for UK borrowers. Signalling that perhaps lenders are becoming less restrictive with their lending policies.
According to the Bank of England net mortgage approvals for house purchases increased from 49,000 in April 2023 to 50,500 in May 2023. Net remortgages also increased from 32,500 to 33,600. Is this a good sign that lenders are coming back to the market with a better appetite for lending?
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