As rate rises now appear to be on hold, what are the ups and the downs?

As rate rises now appear to be on hold, what are the ups and the downs?

The Bank of England’s decision to hold rates at 5.25% for a second time came after 14 increases. So what does this mean for consumers? Are we likely to see more affordable mortgage deals? And can we no longer expect bumper savings rates from the banks?

Over the past two years, mortgage borrowers have seen the cost of a home loan spiral. At the same time, savers finally started to enjoy some decent returns after years in the doldrums. A number of accounts are currently paying more than 6% interest, particularly some of those offered by the so-called challenger banks.

But the Bank of England was keen to point out that dropping rates was not on the agenda yet. Governor Andrew Bailey said last week: “It’s much too early to be thinking about rate cuts.”

Damien Fahy, at website Money to the Masses, says that if we are at peak rates, what is important now is how long we stay there. “The worry is that most consumers seem to believe that rate cuts will be around the corner, but they are probably getting ahead of themselves,” he says.

The cost of new fixed rates – the vast majority of UK mortgage borrowers are on this type of deal – has been falling for some time. Figures from property website Rightmove on Thursday showed the average new five-year fixed-rate deal was 5.36%, down from 5.97% a year ago. The average two-year fix is 5.81%, down from 6.22% a year ago. Read more from The Guardian article >

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Popular question: Will interest rates go down?

Popular question: Will interest rates go down?

The Bank of England has chosen to keep the base interest rate at 5.25%, defying expectations that it would increase it for a 15th consecutive time in a bid to tackle inflation. However interest rates – and therefore mortgage and savings rates – remain historically high. So when will interest rates fall?

Popular question: When will interest rates go down?The latest rise in August took the base rate from 5% to 5.25%, its highest level since the 2008 financial crash. The Bank of England met on 21 September and decided not to increase interest rates yet again. This is the Bank of England’s first meeting since 2021 in which it has not hiked the base interest rate.

The decision to maintain the base rate at its current level is mainly attributed to inflation having dipped. The annual inflation rate fell from 6.8% in July to 6.7% in August.

With inflation falling, experts now believe the rate will peak at around a lower-than-expected 5.75% in Spring 2024 before falling to just below 4% over the next five years.

September’s Bank of England meeting marks the first in which the Bank has not increased the base interest rate since 2021. Read more from Money Mentor at the Times >

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Bank of England raises base rate to 5%

Bank of England raises base rate to 5%

The Bank of England (BoE) has increased the base rate by 50 basis points to 5% — its 13th consecutive rise.

Bank of England raises base rate to 5%This is the biggest rise since February, and follows two monthly increases of just 25 basis points. The BoE’s Monetary Policy Committee voted 7-2 for this increase, with the remaining two voting to keep rates on hold.

This bolder move by the Bank of England is an attempt to dampen inflation, with the consumer price index stuck at 8.7% — significantly higher than its 2 per cent target. Figures published this week also show that core inflation, which strips out volatile food and energy prices, is continuing to rise, and is now at its highest level for 30 years.

In its report the BoE said that previously it had forecast the base rate to average at 4% over the next three years. This has now been revised, due to rising gilt yields, that now suggests “a path for the Bank Rate that averages around 5.5%.” Read more from Mortgage Strategy >

On a positive note…. we just had to share the following podcast: Skipton Talks with Mortgage Strategy about their Track Record Mortgage – no deposit needed!

In this podcast, Kimberley Dondo from Mortgage Strategy is joined by Charlotte Harrison, CEO of Home Financing at Skipton Building Society, and Andrew Montlake, MD at Coreco, to discuss the new, no-deposit, Track Record Mortgage.

Looking for advice from an experienced Mortgage Broker? We would love to help, simply call on: 07834 882 006. Alternatively, you can send us a message >

 
Disclaimer: Please be aware that by clicking on to the above links you are leaving Walker Beckett Mortgages website. Please note that Walker Beckett Mortgages nor HL Partnership Ltd are responsible for the accuracy of the information contained within the linked site(s) accessible from this page.
Budget 2023 reaction: Housing sector ‘largely ignored’ by chancellor

Budget 2023 reaction: Housing sector ‘largely ignored’ by chancellor

Once again, despite many calls for change, another Budget that seemingly failed to address growing pressures on the PRS and another missed opportunity for housing reform. Jeremy Hunt says he has set out a Budget for UK growth – but the property industry argues it has been given the “cold shoulder” by the Chancellor.

Budget 2023 reaction: Housing sector ‘largely ignored’ by chancellorGiven that the Budget in March 2023 was designed to boost economic growth, it was somewhat surprising that housing was completely overlooked. Not even given a mention by the chancellor Jeremy Hunt.

With no fresh support for first-time buyers, a failure to provide solutions to the widening supply-demand imbalance in the market, and nothing to incentivise buy-to-let landlords to continue investing in the PRS, the property industry reacted rather negatively to the Budget statement.

Read more from Property Industry Eye >

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Mortgage approvals fall to lowest level since 2020: BoE

Mortgage approvals fall to lowest level since 2020: BoE

The number of mortgage approvals for house purchases in November 2022 came to 46,075, shows the latest ‘Bankstats’ data from the Bank of England (BoE).

The number of mortgage approvals for house purchases in November 2022 came to 46,075, shows the latest ‘Bankstats’ data from the Bank of England (BoE).

This is the lowest number seen since June 2020, when there were 40,530, and compares to 68,969 approvals made a year previously, in November 2021.

“A third consecutive monthly decline in mortgage approval levels will certainly seem like cause for concern given the doom and gloom that has enveloped the UK property market in recent months,” says easyMoney founder and chief executive Jason Ferrando.

He continues: “However, when viewed in a longer term context, it’s apparent that this is very much a return to the pre-pandemic norm, albeit a rather bumpy landing, rather than the first signs of a property market collapse.”

The data also shows that credit card lending has been on a steady rise since the start of 2022. Read more >

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Bank of England hikes rates as it predicts 13% inflation and long recession

Bank of England hikes rates as it predicts 13% inflation and long recession

Base rate raised by 0.5 percentage points to 1.75%, as Bank says inflation will hit 13% in October​.

Vladimir Putin’s invasion of Ukraine has left Britain on course for a recession lasting more than a year and inflation above 13%, the Bank of England has warned as it raised interest rates for a sixth successive time.

Threadneedle Street said it had no choice but to increase borrowing costs by 0.5 percentage points to 1.75%, blaming Russia for cost of living pressures not seen in more than four decades and a 5% drop in living standards straddling this year and next – the biggest since records began in the 1960s.

Andrew Bailey, the Bank’s governor, said “there is an economic cost to the war”, as he predicted the economy was on course for a period of stagflation – a recession combined with a soaring cost of living.

While accepting the biggest increase in interest rates in 27 years would cause pain, particularly to the least well-off, Bailey said the Bank needed to take action to prevent spiralling price rises from becoming ingrained. Read more from The Guardian article >

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