Tag: Mortgage rates

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UK mortgage rates fall in January 2024

Mortgage rates down

Mortgage lenders have started 2024 by cutting interest rates.

The UK’s biggest lender, the Halifax, has cut some interest rates by nearly a full 1%, with other lenders expected to follow suit. HSBC has announced it will also make cuts in January.

Halifax is reducing its rates, with interest on a two-year fixed deal being cut by up to 0.83%. HSBC is due to reduce rates on its two-year fixed rate for remortgages (for someone with at least 40% equity in their home) falling below 4.5% for the first time since early June last year.

Mortgage rate chart October 2021 – January 2024

The Bank of England’s (BoE) benchmark interest rate has been held three times at 5.25%, analysts now expect the next move to be down.

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UK house prices experience biggest yearly decline since 2009

UK House Prices Fall

The Nationwide Building Society says house prices are 5.3% lower compared to August last year, in the biggest annual decline since 2009.

Nationwide said the drop represented a fall of £14,600 on a typical home in the UK since house prices peaked in August 2022. It also said higher borrowing costs for buyers had led to a slowdown in activity in the housing market. Mortgage approvals are also about 20% below pre-Covid levels.

After 14 rate increases from the Bank of England – a two year fixed rate mortgage is now touching 6.7%

Since December 2021, the Bank of England (BoE) has raised interest rates 14 times in row in a bid to clamp down on rising inflation in the UK. The bank’s base rate now stands at 5.25%. This has led to lenders raising their mortgage rates, putting increased pressure on homebuyers.

The average two-year fixed mortgage rate on Friday was 6.7%, while the average five-year fix was 6.19%.

Average house prices in the UK peaked at £273,751 in August 2022 but fell to £259,153 last month.

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U.S. mortgage rates are high! Could they reach 8%?

Interest rates

The latest U.S. mortgage rates are the highest they have been in decades.

The average 30-year fixed-rate mortgage rose to 7.23% in the week ending 25th August 2023, up from 7.09% the week before, according to latest bank reports from U.S. This is the highest level since June 2001, when it was 7.24%.

The rate on a 30-year fixed mortgage increased to 7.31% in the week ended 18th August 2023, according to Mortgage Bankers Association data. This is the highest level since late 2000.

The 30-year fixed mortgage rate averaged 7.16% with 0.68 points as of August 16, according to U.S. News. This is up from 7.09% with 0.7 points the previous week. The adjustable-rate mortgage increased to 7.6%.

Inflation driving interest rates up

The rise in mortgage rates is driven by indications of ongoing economic strength and inflation pressures, which have also pushed up Treasury yields and the Federal Reserve’s interest rate expectations.

Higher mortgage rates make home buying more expensive and reduce the affordability of homeownership. They also discourage existing homeowners from selling or refinancing their homes, which contributes to the low inventory of available homes for sale.

As a result, home sales have declined and home prices have soared in many markets. Will interest rates touch 8%?