Average mortgage rates below 5% for first time since Truss budget
According to statistics, the average two-year mortgage rate has dropped below 5% for the first time since former Prime Minister Liz Truss' mini-budget in September 2022. The rate has dropped to 4. According to Moneyfacts, 99% is a symbolic turning point
for homebuyers and that lenders are more aggressively
responding. Since last August, interest rates have been cut five times since last August; at the Bank of England's last meeting, a split vote between policymakers raised concerns that there will be another cut this year. Although mortgages are expected to decline significantly as a result of the Bank's rate cuts, a Moneyfacts spokesperson said that although mortgage rates are following the mood music
set by the Bank,
Hundreds of thousands of borrowers are set to remortgage this year. 900,000 fixed rate contracts are set to end in the second half of 2025, according to UK Finance, the banking industry company, although the year's total number is 1. 6 million. According to Moneyfacts, mortgage rates are already well above
the rock-bottom rates of the years immediately preceding" the mini-budget. The so-called mini-budget, which was unveiled by Truss' short-lived chancellor Kwasi Kwarteng, cost UK market turmoil, worth £45 It raised the cost of UK government borrowing, which subsequently rose into mortgage rates. The borrowing cost of mortgages had risen to its highest level since the 2008 financial crisis in July 2023. Interest rates were already rising as central banks around the world, including the Bank of England, grappled with inflation, which was exacerbated by energy price shocks following Russia's full-scale invasion of Ukraine.
Last week, the Bank of England revealed that inflation is expected to rise more than anticipated this year, with 4% in September and then falling to 2% in 2027.
according to Moneyfacts, which, after the last cut of 4%. According to mortgage lender Halifax, average house prices rose by more than £1,000 in July to £298,237 last week.This is likely to mean that the base rate will remain at its current level for longer,
The result is a housing market that continues to show resilience, with activity levels remaining stable,While mortgage rates are still at historic highs and wages are increasing, Halifax's head of mortgages, Amanda Bryden, said the picture on affordability is gradually improving.
she said.We expect house prices to continue on a modest path throughout the year.
