Mortgage News – 26th February 2024
This week, most lenders, except Halifax, have raised their mortgage rates, signalling a market shift from the early year optimism and reflecting rising funding costs and slower-than-anticipated base rate declines.
Mortgage Rate Changes
- Santander increases all residential and buy to let fixed rates including product transfers by up to 0.34%
- TSB increases residential rates by up to 0.30% now starting from 4.44%
- HSBC increases rates with sub-four per cent rates retreating from the market.
- NatWest pushes fixed rates up further (10-15bps across their range)
- Virgin Money increases rates with residential remortgage rates now starting from 4.39%
- Halifax cuts fixed rates
Expert Rate Analysis
This week has seen a general increase in mortgage rates among major and niche lenders, with Halifax being a notable exception moving in the opposite direction.
The recent increase from HSBC highlights the withdrawal of mortgage rates under four percent.
This upward trend in rates seen over the last couple of weeks has dampened initial optimism in the market that was high at the beginning of the year. Despite these increases, the current rates are significantly lower than last summer’s peak.
Rising funding costs and a base rate decline slower than anticipated prompted lenders to increase their rates. The market had initially anticipated multiple base rate cuts in 2024, expecting a drop to 3.75% by year-end. However, recent inflation readings have adjusted these expectations, now forecasting a decrease to 4.5% by the end of the year.
Nonetheless, the market is still intensely competitive, with the likelihood of ongoing rate fluctuations as lenders react to emerging economic data.
The rate decreases are not linear, the current upward adjustments might not signify a long-term issue and it is expected that sub-four percent rates may reappear, but only when confidence in the market returns. The future of mortgage rates will hinge on further inflation trends and the Monetary Policy Committee’s decisions on the base rate, currently held at 5.25%.
2 and 5 Year Swap Rates
Swap rates continue to increase, so again increases from lenders are not unexpected as their funding costs increase.
| Swap Rate | 22-Feb-24 | 23-Jan-24 | 23-Feb-23 |
|---|---|---|---|
| 2 Year | 4.533% | 4.320% | 4.266% |
| 5 Year | 3.993% | 3.775% | 3.844% |
Mortgage News – 19th February 2024
This week’s update includes rate increases, the latest housing market trends from the Land Registry, rental price changes, and recent GDP figures.
Mortgage Rate Changes
- NatWest Increase Fixed Rates – up to 0.2% across their residential fixed range
- Coventry rises fixed rates across the board
- Nationwide increased both tracker and fixed rates, by up to 0.25%
- Santander has cut rates up to 0.16% for those looking to remortgage or take out a Product Transfer.
Land Registry House Price Index
Land Registry published its December House Price Index.
Key points below:
- Average UK house prices decreased by 1.4% in the 12 months to December 2023 (provisional estimate), up from a decrease of 2.3% (revised estimate) in the 12 months to November 2023.
- The average UK house price was £285,000 in December 2023, which was £4,000 lower than 12 months previous.
- Average house prices over the 12 months to December 2023 decreased in England to £302,000 (negative 2.1%), decreased in Wales to £214,000 (negative 2.5%), but increased in Scotland to £190,000 (3.3%).
- Average house prices increased by 1.4% to £178,000 in the year to Quarter 4 (Oct to Dec) 2023 in Northern Ireland.
- Within England, the North West had the highest annual percentage change in the 12 months to December 2023 (1.2%), while London saw the lowest (negative 4.8%).
Index of Private Housing Rental Prices
The Index of Private Housing Rental Prices, UK: January 2024 was published.
Key points below:
- Private rental prices paid by tenants in the UK rose by 6.2% in the 12 months to January 2024, unchanged for the second consecutive month.
- Annual private rental prices increased by 6.1% in England, 7.0% in Wales and 6.8% in Scotland in the 12 months to January 2024.
- Within England, London had the highest annual percentage change in private rental prices in the 12 months to January 2024, at 6.9%, while the North East saw the lowest, at 4.7%.
Gross Domestic Product (GDP)
The latest GDP figures have just been released and show the UK economy contracted in the final three months of 2023. GDP first quarterly estimate, UK: October to December 2023.
ONS revealed that UK GDP is estimated to have fallen by 0.3% in Quarter 4 (Oct to Dec) 2023, following an unrevised fall of 0.1% in the previous quarter, putting the UK in a technical recession.
The UK’s recent descent into a technical recession, highlights a disconnect between policymakers and the public’s struggle with escalating mortgage and living expenses. Despite the potential for this situation to ease Swap rates and encourage lending adjustments, the Bank of England appears hesitant at the moment to implement the necessary cuts. The last quarter of 2023’s GDP decline not only pressures the Bank and the government but also signals to consumers the potential for earlier-than-anticipated interest rate cuts.
2 and 5 Year Swap Rates
Swap rates have been steadily increasing over the past few weeks, so increases from lenders are not unexpected as their funding costs increase.
| Swap Rate | 15-Feb-24 | 16-Jan-24 | 16-Feb-24 |
|---|---|---|---|
| 2 Year | 4.44% | 4.08% | 4.11% |
| 5 Year | 3.89% | 3.52% | 3.72% |
Mortgage News – 12th February 2024
Rate Increases
Recent adjustments by Halifax and HSBC, among other lenders, signal a dynamic shift in remortgage and purchase rates, reflecting the ongoing fluctuations in the financial markets:
- Halifax and HSBC increase remortgage rates, while lowering purchase rates
- NatWest reprices upwards – For purchase and remortgage, they increased rates up to 0.11%.
- Accord makes changes to new businesses mortgage range – Increasing rates by 0.10%
- TSB increasing their residential, buy to let and product transfer rates.
- Virgin Money expands Fix and Switch range – Added new Fix and Switch loan-to-value ratios at 95% and 70% to its product suite.
Halifax January 2024 House Price Index
Halifax published its January house price index which indicates a continuing upward trend in property prices:
- Average house prices rose by +1.3% in January, the fourth monthly rise in a row
- Property prices grew +2.5% annually, the highest annual growth since January 2023
UK Finance Arrears and Possessions
UK Finance recently released its Arrears and Possessions Q4 2023. This shows the challenges within the housing sector.
Homeowner Mortgages
- Arrears increased by 7% to 93,680
- Property possessions decreased by 14% to 540 properties
Buy to let Mortgages
- Arrears increased by 18% to 13,570.
- Property possessions Increased by 11% to 500.
2 and 5 Year Swap Rates
Both the 2 and 5 year swaps are trending higher than last month and higher than last week when the swaps were approximately 25 to 31bps lower.
- 2 Year Current SONIA Swaps: 4.419% (08/02/24)
- 5 Year Current SONIA Swaps: 3.560% (08/02/2024)
Mortgage News – 5th February 2024
Last week we saw again a mixture of lender movements, Bank of England maintaining the rate at 5.25% and mortgage approvals increasing.
Increased rates
- Nationwide increases rates by up to 0.3%, having been very competitive.
- Barclays Increasing Remortgage Rates, Reducing Purchase Deals
- Co-Op Increased selected rates by up to 0.60%
- The Mortgage Works increased their buy to let rates across their new business product range
Reduced rates
- Coventry BS reduced residential rates by up to 15bps and buy to let rates by up to 40bps.
- TSB reduced its residential range with rate reductions up to 0.85%.
Criteria changes
- HSBC: Lending up to the age of 80.
Nationwide House price Index
Nationwide published its Nationwide January House Price Index, which showed prices rose 0.7% this month. There was further recovery in the annual rate of change, with prices down just 0.2% compared with a year ago.
Bank of England rate decision 1 Feb 2024
The Bank of England left the base rate on hold at 5.25%. Six members voted in favour of maintaining the rate. Three members voted against the proposition. Two members preferred to increase Bank Rate by 0.25 percentage points, to 5.5% and one member, preferred to reduce Bank Rate by 0.25 percentage points, to 5%.
Mortgage Approvals – Bank of England December 2023
The Bank of England published its December Money & Credit report, which showed that net mortgage approvals for house purchases rose from 49,300 in November to 50,500 in December. Also net approvals for remortgaging increased from 25,700 in November to 30,800 in December.
2 and 5 Year Swap Rates
Both the 2 and 5 year swaps are trending higher than one month earlier, when the swaps were approximately 12 to 15bps lower.
- 2 Year Current SONIA Swaps: 4.158% (02/02/24)
- 5 Year Current SONIA Swaps: 3.560% (02/02/2024)
