The Bank of England’s Monetary Policy Committee (MPC) voted to keep interest rates at 5.25% today. With inflation falling and another announcement next week on the latest inflation rate, many think interest rates may have peaked.
The clearest sign that confidence is returning to the market is that mortgage interest rates are falling. Rightmove mortgage expert Matt Smith says we have seen average mortgage rates steadily decline for 20 consecutive weeks, contributing to a more stable market.
Rightmove’s weekly mortgage tracker has identified that the average five-year fixed mortgage rate is now 5.07%, down from 5.30% a year ago, with fixed mortgage rates 2 year is currently 5.48%, down from 5.55% a year ago. The property portal predicts demand will increase from January, boosted by the traditional Boxing Day supply.
“Market opinion still holds that the Prime Rate has reached its peak. The fact that swap rates – the underlying cost of mortgages to lenders – fell further after the latest UK GDP data was published yesterday, is another sign shows the market is confident about how today’s announcement will play out.
“Many of the factors that contributed to the rate freeze in September and November are continuing, and a flat Base Rate, which could begin to decline in 2024, is increasingly likely to occur. . Today’s holding could give lenders the opportunity to offer further mortgage rate cuts – although it is likely that lenders could delay offering these to those borrowers this Christmas, to take advantage of the seasonal spike in demand that typically occurs in January.”
In a press release, MPC said that if economic targets are achieved, interest rates will fall again. Because Andy Sommerville, Director at Search Acumenprovider of asset data and insights, the decision to leave interest rates unchanged now comes as no surprise.
“For the real estate sector, we expect this decision to maintain the status quo, keeping real estate prices stable in the short term, but still leaving people feeling no better. Although much progress has been made in combating ongoing inflationary pressures, extremely high borrowing costs remain a barrier for homebuyers and real estate investors alike. This, coupled with affordability issues as prices remain high, especially for first-time buyers, means we are unlikely to see growth in either market.
Even so, stable rates and a certain stability can provide a sense of confidence in uncertain times. Compared to the consistent increases we’ve seen before, this may be okay for some. The aim of the game now is to prevent failed trades before too many external factors come into play. Technology is a ready and waiting solution. Only when we significantly digitize parts of the system and connect these processes will we begin to deliver results. Faster and more accurate transactions will help fuel our current slow-growing market, while saving both individuals and businesses time and money.”
And resonated with many people in the real estate industry, Nathan Emerson CEO Propertymark Hopefully the worst impact of higher interest rates is over and some momentum can return to the market. :
“With interest rates remaining unchanged once again, Propertymark is optimistic that the peak of the turmoil has passed, however, it may take some time for the housing market to gain full momentum and confidence. believe again.”
“Another hold provides continuity and stability, while also providing an opportunity for the lender to reassess and reprice. It will certainly add ammunition to the ongoing interest rate war between lenders – which is great news for borrowers and potential buyers.
More John Phillips, CEO of Spicerhaart and Just Mortgages.
The exchange rate remaining the same is good news for the new year Nathan Reilly, Director at Twenty7tec,
“During months where interest rates are held steady, we may not see the spike in daily activity during months where rates are raised or lowered. But stable monthly interest rates are also something the market can price in and use, and while interest rates remain high, mortgage holders and potential buyers have finally been waiting for stability. , which makes this latest holding resolution significant in the new year.
“Today’s decision means people know what their prices will be for at least six weeks, which means we’re likely to see more activity in the new year as real buyers return after the Christmas break.”
Kevin Roberts, CEO, General Mortgage and Legal Services add
“Today’s decision by the Bank of England to keep interest rates steady should not be seen as a sign of a bleak mid-winter but of a season ripe with opportunity. As our markets enter a new normal with average interest rates hovering around 4-6% – and close to pre-pandemic averages – it is likely that we are looking at prices that remain at this level and may be worth committing to. . Lenders continue to price products competitively and just this week, average two- and five-year fixed rates fell to their lowest level in six months.”