Mortgage Rate Drops
At the end of September, the average five year fixed rate mortgage fell to 5.99%. Two year deals came in at 6.5%. Given that the Bank of England decided to not increase the Bank Rate, lenders have increased confidence in the market and have started to lower mortgage rates.
Roughly ¾ of all mortgages are on fixed rate deals, meaning these price hikes will only affect consumers once their current deal ends and they come to remortgage. UK Finance estimates 800,000 of these fixed rate mortgages will finish in the second half of 2023, while 1.6 million will finish in 2024.
Despite some economists expecting the Bank of England to increase interest rates again, they stayed at current levels. Since the announcement, major banks across the country have cut the rates offered in their mortgage deals. This isn’t all good news though, as even though the rates are below 6%, this is the equivalent of rates seen about 3 months previously. In July, a typical five year fixed rate mortgage was 5.97%.
The affordability of increased mortgage rates means that anyone facing a jump of a percentage or two will see hundreds of pounds extra towards their mortgage payments every month. In the housing market, the general expectation is that this will lead to further falls in house prices. However, mortgage rates lower than 5% could be on the horizon.
The Governor of the Bank of England, Andrew Bailey, reminded the public that his duty is to reduce inflation. As such, any talk about cutting the current interest rate of 5.25% would be premature. There is still a long way to go before ultra low levels of mortgage rates will be seen again.
On the other hand, the Bank Rate has caused savings interest rates to improve. Moneyfacts, the financial information service, monitored the average interest rate for an easy access savings account to be 3.14%. Yearly fixed deals without easy access came up even better at 5.44%. Some of the deals on the market are the best around in 15 years, but it pays to shop around to see what would suit you.
Unfortunately, the high mortgage rates have caused a knock-on effect for renters as landlords have been passing on the costs. Rents have slowly increased in the last year as a result. The Office for National Statistics reported that rents increased by 5.1% in the year to June 2023. In Scotland and Wales, these figures were slightly higher.
Asking prices have also been down compared to last year. A new sale was around 4.2% lower than the asking price, according to Zoopla. Urban London and the South East were around 4.8%, but the rest of the UK was 2.8% lower. Plenty of buyers are waiting for the market to settle or find value for money.
Get the Most Out of Your Money
With savings interest rates rising, wages marginally increasing in real terms, but prices still remaining high, there are always ways you can get money back. We can help you with tax claims, such as receiving money back for washing your uniform, or Marriage Tax Allowance.
We can also help with receiving compensation, such as through a delayed flight. This can entitle you to up to £520 per passenger. As you can also make a claim for a flight that was delayed in the past 6 years, this could equate to a lot of compensation if claiming for multiple flights.