Mortgage News – 29th January 2024
Last week the mortgage market saw some conflicting rate changes due to the volatility of the swap rates.
Here’s a summary of the key changes:
- Santander increases selected fixed rates as swap rates wobble – both purchase and remortgage mortgages increase from 0.15% to 0.30%.
- Nationwide cuts mortgage rates by up to 0.81% – now offering sub-four percent rates for the first time in eight months.
- Virgin Introduces a Five-Year Fixed Mortgage with a Two-Year Early Repayment Charge.
- Barclays cuts up to 0.5% off fixed rate mortgages for home movers and remortgages.
- Family BS cuts rates by up to 0.65 per cent
- BM Solutions reduces selected BTL mortgage rates – selected fixed rates will be reduced by up to 0.14%.
1% Mortgages
The government is reportedly considering working with the mortgage industry to introduce 1% deposit mortgages – to help first-time buyers who cannot save for a deposit.
The 1% deposit scheme for first-time buyers, though helpful in the short term, might inflate house prices without addressing the underlying housing crisis. To truly resolve housing challenges, a broader strategy, including building more affordable homes, is necessary in my opinion.
Bank of England MPC meeting this week – 1st February
My thoughts are that the Bank of England is likely to keep interest rates at 5.25% in the next meeting, signalling lenders to continue reducing mortgage rates. Despite a recent rise in inflation, analysts still anticipate a possible rate cut in May.
Swaps on the rise: how long before lenders increase rates?
The recent spike in swap rates, driven by factors like political tensions and inflation, suggests a volatile mortgage market in 2024. This increase, particularly in long-priced swaps, is likely to lead to rate rises and product withdrawals by lenders, reflecting their sensitivity to market changes.
Mortgage News – 22nd January 2024 – More Rate Cuts
Last week the mortgage market saw more rate cuts and improved offerings from various lenders, indicating a competitive and borrower-friendly environment.
Here’s a summary of the key changes:
- HSBC: Further reductions in residential mortgage rates and increased cashback offer for first-time buyer products at 95% LTV.
- NatWest: Second price reduction in January, indicating a competitive market stance.
- Coventry Building Society: Lowered rates on all standard two, three, and five-year deals, with a notable 75% LTV remortgage product rate cut to 4.42%.
- Virgin Money: Removed interest-only Loan To Income (LTI) cap and improved the LTI limits based on income and loan-to-value.
- Leeds Building Society: Cut rates on 90% LTV two-year fixed products for first-time buyers by 0.05%.
- Skipton Building Society: Lowered 100% LTV mortgage rate by 0.14%.
- The Mortgage Works: Reduced buy-to-let rates by up to 0.12%.
Inflation Update
While the mortgage market is offering some good news, the Bank of England recently reported a surprise rise in inflation to 4.0% in the 12 months to December 2023, marking the first increase since February 2023. This rise in inflation is a critical factor when looking at future mortgage rates.
2 and 5 Year Swap Rates
UK swap rates, particularly the Sterling Overnight Index Average (SONIA), play a crucial role in the financial markets, including the mortgage sector.
The swap rates are instrumental in determining the cost of borrowing for lenders. These rates influence the interest rates that banks charge to their customers.
Both the 2 and 5 year swaps are trending below current base rate which indicates a lower base rate in the future. However, these rates have increased compared to the start of the year when the swaps were approximately 0.20% lower. (19th January 2024)
2 Year Current SONIA Swaps: 4.259%
5 Year Current SONIA Swaps: 3.698%
Summary
Overall, the pattern of rate cuts and improved offers, despite a slight increase in inflation, suggests a highly competitive mortgage market. This could be a response to the broader economic conditions or a strategy to gain market share. However, the downward trend in rates may be coming to an end as the , following the unexpected increase in inflation announced on Wednesday and the slight increase in the swap rates.
Mortgage News – 15th January 2024 – Exciting Phase
What a start to 2024. We’re in the midst of an exciting phase in the mortgage market.
The beginning of this year has shown promising trends in mortgage rates, with a noticeable increase in rate cuts for both residential and buy-to-let mortgages. These widespread rate cuts are likely influenced by the reduction in the swap rates and the positive inflation figures released in December.
Interestingly, the variety of available deals in the market has surged to a peak not seen in the last 15 years.
Last week we saw lenders compete fiercely for market share, and we saw substantial rate cuts across various mortgage products:
- Accord Mortgages has lowered their residential and buy-to-let rates by up to 0.95 per cent, including a market-leading sub-five per cent five-year fixed rate
- Barclays has reduced mortgage rates across its residential purchase range by up to 0.5 per cent, with one deal dropping to 4.1 per cent
- Santander has cut select new business and product transfer rates to below four per cent.
- Skipton Building Society has reduced rates across 99 of its mortgage products by as much as 0.66 per cent.
- Halifax has lowered two and five-year fixed rates for homebuyers and movers by up to 0.45 per cent, bringing some deals under five per cent.
- Yorkshire Building Society has lowered rates across its range by up to 0.645 per cent and bought out a five-year fixed rate at 3.99 per cent.
In Summary
Several UK lenders, including Accord Mortgages, Barclays, Santander, Skipton Building Society, Halifax, and Yorkshire Building Society, have significantly reduced their mortgage rates. Reductions range from 0.45% to 0.95%, with notable offers like sub-five per cent five-year fixed rates and two year deals less than 4%. These changes apply to different mortgage products, including residential, buy-to-let.
Interestingly the Co-operative Bank perhaps went a little too far with their cuts as they have withdrawn a mortgage with a rate below four per cent due to increased demand.
Looking Ahead
It’s an opportune time for borrowers to consider their options. The current mortgage price war, sparked by a sluggish 2023, offers relief and a variety of choices for borrowers.
5th January 2024 – Bright Beginnings in 2024
2024 is off to a fantastic start in the UK mortgage market! We’re witnessing an encouraging trend as major lenders announce significant rate reductions, setting a positive tone for the year.
Key Rate Cuts to Note this Week:
Halifax makes a significant move, cutting its 2-year fixed rate for existing customers by a substantial 0.83%.
Leeds Building Society follows suit, reducing rates on many of its products by up to 0.49%.
HSBC announces a decrease in their cheapest 5-year fix from 4.79% to 3.94%, and their 2-year fix from 4.93% to 4.49%.
TSB steps up for first-time buyers, home movers, and remortgagers, slashing rates by up to 0.55% on 2-year fixed products.
NatWest joins the wave, cutting rates by up to 0.52% for new and existing residential and buy-to-let borrowers.
Why use a Broker?
This dynamic market requires quick action and adaptability. We’re equipped to handle these rapid changes, ensuring you benefit from the best available rates.
We have access to the whole mortgage market, meaning we can find you the best possible deal available.
Our service extends beyond just securing your mortgage rate, we continuously monitor and track rates even after your application – which you don’t get by going directly to the lender.
