29th May 2024
Last week saw shifts in mortgage rates, with Halifax and TSB reducing rates while Barclays increased theirs. The Consumer Prices Index (CPI) fell to 2.3% in April 2024, and official data indicated a rise in house prices and private rents. Additionally, Ofgem announced a decrease in the energy price cap, and experts weighed in on the challenging outlook for the Conservatives in the upcoming general election.
Mortgage Rate Changes
- Halifax cuts rates by up to 0.19% on 2 and 5 year fixed rate products for both first-time buyers and home movers.
- TSB reduced rates by up to 0.4% on first-time buyers, home movers and remortgage products.
- Barclays increased rates on many mortgage deals by around 0.25% to remove their competitive edge.
Inflation falls to 2.3% in April
The Consumer Prices Index (CPI) rose by 2.3% in the 12 months to April 2024, down from 3.2% in the 12 months to March, slightly higher than the 2.1% economists had predicted, according to ONS – Consumer price inflation, UK: April 2024
Private rent and house prices, UK: May 2024
Official data on house prices and rentals was released from ONS – Private rent and house prices, UK: May 2024.
The average UK house prices rose by 1.8% in the 12 months leading up to March 2024 (provisional estimate), compared to a revised decrease of 0.2% in the 12 months leading up to February 2024.
Additionally, average UK private rents increased by 8.9% in the 12 months leading up to April 2024 (provisional estimate), down from a 9.2% increase in the 12 months leading up to March 2024.
General Election confirmed for 4th July
Several financial experts weighed in on the upcoming election, predicting a tough road ahead for the Conservatives. Many believe the Tories have little chance of winning, given their lack of a cohesive plan and widespread dissatisfaction with their performance, while Labour is seen as likely to capitalize on this discontent despite its own challenges. Some suggest that, despite recent economic improvements, the Tories’ last-minute election call and ongoing internal strife may not be enough to retain power.
Retail sales fall by 2.3% in April 2024
ONS revealed that retail sales volumes declined by 2.3% in April 2024, following a revised decrease of 0.2% in March 2024. Retail sales, Great Britain: April 2024
Changes to energy price cap
Ofgem announced changes to energy price cap between 1 July to 30 September, the annual energy cost for a typical household using electricity and gas and paying by Direct Debit will decrease to £1,568. This is £122 less than the price cap set from April 1 to June 30, 2024 (£1,690).
2 and 5 Year Swap Rates
The 2-year swap rate has increased by 0.256% compared to last week, while it has decreased by 0.044% since last month and by 0.404% since last year.
Similarly, the 5-year swap rate has risen by 0.217% from the previous week, with a slight decrease of 0.008% over the past month and a decrease of 0.414% over the past year.
| Swap Rate | 24-May-24 | 29-Apr-24 | 30-May-23 |
|---|---|---|---|
| 2 Year | 4.678% | 4.623% | 5.082% |
| 5 Year | 4.098% | 4.123% | 4.512% |
Mortgage News – 20th May 2024
Last week we saw rate reductions from Barclays and HSBC cutting rates on residential and buy-to-let mortgages, and two buy to let lenders, Kent Reliance and Fleet mortgages introduced new buy-to-let options.
Additionally, the latest jobs data shows the UK’s unemployment rate rising to 4.3% for January to March 2024, while annual earnings growth reached 6.0% excluding bonuses.
The Ministry of Justice reports a 28% surge in possession claims, marking the highest since 2019, while mortgage possession actions and landlord possession claims have notably increased, alongside a rise in UK credit card transactions and concerning trends in individual and company insolvencies.
Mortgage Rate Changes
- Barclays reduced rates on their Residential Purchase, Remortgage and Reward ranges.
- HSBC reduced residential rates by 0.04% to 0.18%, buy-to-let rates by 0.04% to 0.14%, and residential switchers by up to 0.11%.
- Kent Reliance introduced new buy-to-let products with reduced rates, including 75%, 55%, and 65% loan-to-value options for 5-year fixed rates, as well as new large multi-unit freehold block products for properties up to 20 units.
- Fleet Mortgages launched new limited company 65% loan-to-value loans and cut pricing on two of its 65% LTV standard products by 20 basis points.
ONS: Wage Inflation and Unemployment
The latest official jobs data reveals that the UK’s unemployment rate was estimated at 4.3% for the period from January to March 2024, which is higher than the estimates from a year ago and has increased in the most recent quarter. Additionally, the annual growth in employees’ average regular earnings (excluding bonuses) in Great Britain was 6.0% during the same period, while the annual growth in total earnings (including bonuses) was 5.7%. Labour market overview, UK: May 2024
Ministry of Justice: possession claims up 28%, highest since 2019
Mortgage possession actions have continued to rise, with claims increasing by 28% compared to the same quarter in 2023, and repossessions by county court bailiffs up by 4%, according to the Ministry of Justice Mortgage and landlord possession statistics: January to March 2024. Similarly, landlord possession claims rose by 6%, with the median time from claim to mortgage repossession decreasing to 45.7 weeks, while the time to landlord repossession increased to 24.1 weeks.
UK Credit Card Transactions Surge
UK Finance published new card spending data showing that outstanding balances on credit card accounts grew by 9.5 per cent over the twelve months to February 2024.
Insolvency data April 2024
The latest official individual and company insolvency data reveals troubling trends. In April 2024, 9,651 individuals in England and Wales entered insolvency, a 10% increase from March 2024 and 5% higher than in April 2023. Additionally, the number of registered company insolvencies rose to 2,177 in April 2024, an 18% increase from both March 2024 and April 2023, remaining significantly higher than the levels seen during the COVID-19 pandemic and the 2014-2019 period.
2 and 5 Year Swap Rates
The 2-year swap rate has decreased by 0.022% compared to last week and risen by 0.150% since last month. Similarly, the 5-year swap rate has decreased by 0.039% from the previous week. However, increased by 0.167% over the past month.
| Swap Rate | 16-May-24 | 17-Apr-24 | 17-May-23 |
|---|---|---|---|
| 2 Year | 4.422% | 4.667% | 4.444% |
| 5 Year | 3.881% | 4.131% | 3.963% |
Mortgage News – 13th May 2024
Last week we saw NatWest and HSBC increase their product transfers for their existing customers, Skipton, Metro and Virgin Money all increasing rates. However Barclays adjusted to be more competitive. Halifax House Price Index highlighted little movement in house prices, Bank of England’s decision to maintain interest rates. Additionally, positive GDP growth figures.
Mortgage Rate Changes
- NatWest increased Product Transfer fixed rates.
- HSBC increased Product Transfer fixed rates.
- Barclays reduced fixed rates on purchases by up to 0.39% at the higher Loan to Value pricing.
- Skipton increased various rates across their residential and buy-to-let deals.
- Metro increased their residential rates at 80% Loan to Value and below.
- Virgin Money increased selected residential and buy to let rates by up to 0.20%
Halifax April 2024 House Price Index
Average house prices rose by +0.1% in April on a monthly basis, after a fall of -0.9% in March, property prices grew by +1.1% annually vs +0.4% last month according to the lender, according to the April 2024 Halifax House Price Index.
Bank of England holds interest rates at 5.25%
Financial experts expressed their disappointment with the Monetary Policy Committee’s decision to maintain the base rate, citing missed opportunities to boost the economy and provide relief to struggling borrowers. Bank Rate maintained at 5.25% – May 2024
Despite expectations for a rate cut, the split decision (7-2) suggests that a reduction may be on the cards soon, potentially providing a welcome boost to the housing market and offering relief to borrowers facing financial strain. However, some experts anticipate a more cautious approach from the Bank of England, with rate cuts likely to be delayed until later in the year.
Our sentiment is one of cautious optimism, with expectations of potential rate reductions soon.
ON: GDP shows promising growth
The Office for National Statistics (ONS) released GDP monthly estimate, UK: March 2024 showing that monthly real gross domestic product (GDP) grew by 0.4% in March 2024, following growth of 0.2% in February 2024 and 0.3% in January 2024. This results in a quarterly growth rate of 0.6% for Quarter 1 of 2024, following declines in the previous two quarters.
Services output contributed significantly to this growth, with a 0.5% increase in March and a 0.7% increase over the three months to March 2024.Production output also saw growth, while construction output experienced a decline.
Chancellor Jeremy Hunt commented that these growth figures indicate a return to economic health since the pandemic began.
2 and 5 Year Swap Rates
The 2-year swap rate has decreased by 0.172% compared to last week, while it has risen by 0.130% since last month and has remained relatively stable compared to last year, with a marginal decrease of 0.007%.
Similarly, the 5-year swap rate has decreased by 0.192% from the previous week, with increases of 0.113% over the past month and 0.039% over the past year.
| Swap Rate | 09-May-24 | 10-Apr-24 | 10-May-23 |
|---|---|---|---|
| 2 Year | 4.444% | 4.517% | 4.415% |
| 5 Year | 3.920% | 3.964% | 3.949% |
Mortgage News – 7th May 2024
Last week we witnessed multiple high street banks increase their mortgage rates following the rise in swap rates a couple of weeks ago. The Bank of England reported a rise in mortgage approvals for house purchases, though remortgaging experienced a decline. Nationwide confirmed that house prices have slowed and swap rates saw little movement.
Mortgage Rate Changes
- Santander increased rates on two occasions last week. initially by up to 0.25%, then a further increase by up to 0.26% on some products.
- NatWest increased rates across the full range up to 0.22%.
- Nationwide increased rates across its fixed rate range by up to 0.25%.
- Halifax increased rates on purchase products by up to 0.2%.
- BM Solutions increased rates by up to 0.24%.
- Virgin increased rates on products between 0.08% and 0.2%
- Skipton BS reduced rates on a number of its fixed and tracker rate products and also re-introduced higher loan-to-value remortgage options (85% and 90% LTV).
Bank of England – Money and Credit – March 2024
Mortgage approvals for house purchases rose from 60,500 in February to 61,300 in March, the highest number of net approvals since September 2022, according to Bank of England – Money and Credit – March 2024
Conversely, net approvals for remortgaging decreased from 37,700 to 34,200 over the same period.
Nationwide – House prices fall 0.4%
UK house prices fell by 0.4% in April, after taking account of seasonal effects. This resulted in a slowing in the annual rate of house price growth to 0.6% in April, from 1.6% the previous month, according to the Nationwide – April sees slowing in annual house price growth.
Fix for 2 or 5 years?
Figures from UK Finance show that 42% of mortgages taken out in January and February were on a fixed rate for two years. Initial projections of six or seven rate cuts this year have shrunk, with forecasts now suggesting just two or three. The main question I’m being asked is “should I choose a 2 or 5 year fixed rate?”
The choice between a two-year and a five-year fixed-rate mortgage depends largely on individual circumstances, rather than trying to predict future interest rate movements as rates are already priced with this in mind. While the allure of lower rates in the future may tempt some borrowers towards the shorter option, there are inherent risks in relying on the forecasts.
The decision should be based on financial stability and align with the ability to cope with potential rate fluctuations. Additionally, considerations such as the possibility of needing to borrow more and the burden of administrative tasks, especially for self-employed individuals and potentially moving, play significant roles in this decision-making process.
2 and 5 Year Swap Rates
The 2-year swap rate has decreased by 0.050% compared to last week, while it has risen by 0.229% since last month and 0.194% since last year.
Similarly, the 5-year swap rate has decreased by 0.074% from the previous week, with increases of 0.261% over the past month and 0.202% over the past year.
The increase from 2 weeks ago prompted lenders to adjust their rates upwards, as these rates directly impact the pricing of mortgages they offer.
| Swap Rate | 02-May-24 | 03-Apr-24 | 03-May-23 |
|---|---|---|---|
| 2 Year | 4.616% | 4.387% | 4.422% |
| 5 Year | 4.112% | 3.851% | 3.910% |
