Mortgage News – 25th March 2024
Major news last week with the Bank of England holding its base rate steady at 5.25%, and inflation figures confirming a decrease in inflation to 3.4%. Additionally, we saw private rents increasing by 9%, Land Registry confirmed that house prices decreased by 0.6% in the 12 months to January 2024 and a decrease in swap rates indicating lenders could reduce rates as they compete for market share.
Mortgage Rate Changes
- Clydesdale increased residential fixed rates by up to 0.13% and lowered selected buy-to-let and interest-only rates by up to 0.3%.
- TSB increased fixed rates by up to 0.25% across its residential, product transfer and additional borrowing ranges.
- NatWest decreased rates across the fixed range with up to 0.24% on remortgages and 0.7% on purchases. However, they increased their tracker rates by up to 0.40%.
- Skipton Building Society increases selected rates.
Bank rate Held at 5.25%
The Bank of England left rates on hold – Bank rate maintained at 5.25% – March 2024.
It says: “At its meeting ending on 20 March 2024, the MPC voted by a majority of 8–1 to maintain the Bank Rate at 5.25%. One member preferred to reduce the Bank Rate by 0.25 percentage points, to 5%.
The next base rate cut is considered to be in May, although the Bank of England voting 8-1 to hold in March suggests a differing opinion on its timing. Markets are predicting 2-3 rate cuts starting in June, August, and October.
Inflation drops to 3.4% in February
The latest inflation data was released – Consumer price inflation, UK: February 2024. Consumer Prices Index (CPI) rose by 3.4% in the 12 months to February 2024, down from 4.0% in January.
The consensus was for a fall to 3.5%. Meanwhile, Core CPI (excluding energy, food, alcohol and tobacco) rose by 4.5% in the 12 months to February 2024, down from 5.1% in January.
Average UK private rents increased by 9.0%
The ONS published the Price Index of Private Rents (PIPR), which showed average UK private rents increased by 9.0% in the 12 months to February 2024, higher than in the 12 months to January 2024.
In the 12 months to February 2024, average monthly rents increased to £1,276 (8.8%) in England, £723 (9.0%) in Wales and £944 (10.9%) in Scotland. In the 12 months to December 2023, average rents increased by 9.3% in Northern Ireland.
Private rent inflation in the 12 months to February 2024 was highest in London (10.6%) and lowest in the North East (5.7%).
Land Registry HPI January
The Land Registry published its January House Price Index.
It showed that average UK house price annual inflation was negative 0.6% in the 12 months to January 2024, compared with negative 2.2% in the 12 months to December 2023.
Average house price was £282,000 in January 2024, which is £2,000 lower than 12 months ago.
Average house prices in the 12 months to January 2024 decreased in England to £299,000 (negative 1.5%).
Annual house price inflation was highest in the North West, where prices increased by 1.0% in the 12 months to January 2024. London was the English region with the lowest annual inflation, where prices decreased by 3.9% in the 12 months to January 2024.
FCA Joins Other Regulators To Warn Firms On Debt Collection
FCA Joins Other Regulators To Warn Firms On Debt Collection. FCA announced that: “We’ve joined forces with other regulators to call on firms to improve debt collection practices. This is especially important as many consumers continue to feel the strain from cost of living pressures and risk falling into arrears. Together with Ofgem, Ofwat and Ofcom, we’ve set out our expectations across markets, urging firms to:
- make sure customers in debt do not receive excessive communication
- use supportive language
- clearly signpost free debt advice
- make it easy for debt advisers to contact them on behalf of clients
2 and 5 Year Swap Rates
Last week 2 Year swaps decreased by 13.4bps and 5 Year swaps by 10.4bps due to the inflation figures and the base rate announcement.
This is a 18.2bps reduction compared to this time last month for both 2 and 5 Year swaps.
This reduction could lead to lenders reducing rates this week as lenders are eager for market share to recover from a less-than-stellar performance in 2023.
| Swap Rate | 21-Mar-24 | 22-Feb-24 | 22-Mar-23 |
|---|---|---|---|
| 2 Year | 4.351% | 4.533% | 4.222% |
| 5 Year | 3.811% | 3.993% | 3.735% |
Mortgage News – 18th March 2024
Last week, the UK mortgage market saw mixed movements with several lenders raising rates on various mortgage products, while others, like GenH and Coventry Building Society, reduced theirs. GDP showed modest growth in January 2024 despite ongoing challenges, but the rise in both individual and company insolvencies underscored increasing financial distress. Fluctuations in swap rates and an increase in the 5 year swap rates suggest that a reduction in the bank base rate may be more distant than initially expected.
Mortgage Rate Changes
- NatWest has increased rates for existing borrowers – Rates increased up to 0.10%.
- Santander increased their purchase and remortgage fixed rates by up to 0.43% and their product transfer ranges by up to 0.36%.
- The Co-operative Bank increased their residential product switch range by up to 0.72% and their buy-to-let switch range by up to 1.09%.
- Halifax increased rates by up to 0.20% and product transfer rates by up to 0.32%.
- GenH reduced their 2 and 5 year fixed rates by up to 0.25%.
- Coventry Building Society reduced rates across most of their range.
Mortgage Lenders and Administrators Statistics
The Bank of England’s Mortgage Lenders and Administrators Statistics – 2023 Q4 report (which is based on data on mortgage lending activities provided by around 340 regulated mortgage lenders and administrators, shows a strained UK mortgage sector with rising arrears and contracting lending activity.
Mortgage balances in arrears surged, reaching the highest proportion since late 2016.
Total residential mortgage loans and gross mortgage advances declined, reflecting reduced market activity and borrower caution.
New mortgage commitments hit their lowest since early 2013, excluding the pandemic’s onset, indicating a significant downturn in future lending intentions.
There’s also a notable shift in borrowing patterns, with a decrease in high loan-to-income lending and adjustments in the purposes for which mortgages are being advanced.
GDP
GDP monthly estimate, UK: January 2024 – ONS
In January 2024, the UK economy modestly rebounded with a 0.2% growth after a slight decline in December 2023, though it experienced a small contraction over the past three months.
Small business owners share mixed views on the economy: challenges include fluctuating demand, inflation, and supply issues, with the cost of living crisis further dampening consumer spending.
Criticism is directed towards the government and the Bank of England for their handling of the recession. However, some see the recent GDP growth, though modest, as a positive sign for business prospects.
Individual and company insolvencies both up
The latest data on company and individual insolvencies for February 2024 reveals a significant increase compared to the previous year.
Individual insolvencies rose to 10,136, marking a 23% increase from February 2023’s figure of 8,239.
Meanwhile, company insolvencies also saw a rise, reaching 2,102, which is 17% higher than the 1,801 registered in February 2023.
These numbers not only surpass those recorded during the government’s COVID-19 support measures but also exceed pre-pandemic levels.
2 and 5 Year Swap Rates
Last week 2 Year swaps decreased by 2.7bps and 5 Year swaps increased by 3.8bps which is now 2.6bps higher than last month and 27.6bps higher than last year. (14 Mar 2024)
Rising five-year swap rates imply that markets expect the Bank of England’s base rate to stay higher for longer. This affects lenders borrowing costs, suggesting mortgage rates will be higher than previously thought for a more sustained period.
| Swap Rate | 14-Mar-24 | 15-Feb-24 | 15-Mar-23 |
|---|---|---|---|
| 2 Year | 4.485% | 4.443% | 3.946% |
| 5 Year | 3.915% | 3.889% | 3.639% |
Mortgage News – 11th March 2024
Last week we saw fluctuations in mortgage rates, mixed responses to the Spring Budget, and a forecasted rise in mortgage rates to 2027.
Nationwide’s strategic acquisition of Virgin Money signals a competitive shift in the UK banking industry. Meanwhile, Halifax’s latest House Price Index reveals continuous growth in property prices, and the UK Finance Household Finance Review underscores the persistent economic pressures on the housing market, amid changing swap rates.
Mortgage Rate Changes
- Barclays made changes to their residential and buy to let range – Increases and decreases.
- NatWest increases mortgage rates for existing customers – Increases of between 0.05% and 0.10% on selected 2-year and 5-year deals.
- Clydesdale Bank – Increasing rates on 2 and 5 year fixes by up to 0.29%.
- HSBC increases fixed rates across whole product range
- Virgin Money increases rates by up to 0.18%
Spring Budget – Summary
The Spring Budget 2024 received mixed reactions for its impact on the housing market, introducing measures like National Insurance cuts and child benefit adjustments but failing to address significant needs such as the anticipated 99% mortgage scheme and stamp duty reform.
The budget’s key changes impacting the housing sector included, the elimination of tax relief for furnished holiday lets and Multiple Dwellings Relief, alongside a modest reduction in Capital Gains Tax, which pose challenges and provide little relief to landlords.
OBR forecasts and mortgages
The Office for Budget Responsibility forecasted that average mortgage rates will increase to an average of 4.2% by 2027, indicating that consumers should anticipate higher rates for the foreseeable future compared to previous norms.
Economic and fiscal outlook – March 2024
Nationwide to buy Virgin Money
Nationwide plans to acquire Virgin Money for £2.9 billion, a move poised to significantly challenge the dominance of major UK banks. This acquisition signals Nationwide’s intent to rival Halifax for the top spot in the UK mortgage market.
Halifax House Price Index
Halifax House Price Index February 2024 – Prices rise for fifth consecutive month.
Halifax’s report indicated a 0.4% increase in average house prices for the month, marking the fifth consecutive monthly gain. On a year-over-year basis, property prices saw a 1.7% increase, compared to a 2.3% rise the previous month.
UK Finance Household Finance Review Q4 2023
Q4 2023 Household Finance Review reveals a volatile household confidence and weak consumer spending due to economic uncertainty, alongside very weak mortgage borrowing throughout the year exacerbated by high mortgage rates and living costs. Despite a slight optimism for an uptick in lending at the start of 2024, affordability constraints continue to dominate the mortgage market, with an increase in longer-term borrowing not sufficiently addressing the affordability gap. The report also notes a rise in mortgage arrears for the fifth consecutive quarter and stable, low possession numbers, indicating ongoing financial pressure on households despite some areas of minor growth in internal Product Transfers.
Top of Form
2 and 5 Year Swap Rates
2 Year swaps increased by 2.6bps since last week, 5 Year swaps have decreased by 8.7bps. (8 Mar 2024)
| Swap Rate | 07 Mar 2024 | 08 Feb 2024 | 08 Mar 2023 |
| 2 Year | 4.512% | 4.158% | 4.522% |
| 5 Year | 3.877% | 3.878% | 4.000% |
Mortgage News – 4th March 2024
Last week we saw some interesting updates, including, the latest on household costs, mortgage arrears and repossessions trends, property transaction data, the Bank of England’s credit report, Nationwide’s house price index, and last but not least – Kerr & Watson’s award win.
Best Newcomer In The Mortgage Space
Kerr & Watson has now achieved award-winning status, we are thrilled to announce our victory in securing the ‘Best Newcomer in the Mortgage Space’ at the MoneyAge Mortgage Awards.
Mortgage Rate Changes
- Coventry increased all fixed rates on residential and buy to let
- Nationwide ups selected fixed rates increased by up to 0.15%
- Halifax increased rates by up to 0.18%
Household Costs – ONS
ONS has just published a report entitled, Household Costs Indices for UK household groups: October 2023 to December 2023.
The report confirms that the Household Costs Index rose by 5.0% in the year to December 2023, with mortgagor owner occupiers experiencing the highest inflation rate at 6.3% due to rising mortgage interest, while the inflation rates for various household types and tenure groups varied, reflecting diverse impacts from food, beverage costs, and energy prices adjustments.
Arrears and Repossessions Update
A report from The Moneycharity highlighted that mortgage arrears and repossessions are on the rise.
The Financial Conduct Authority noted that at the end of the third quarter of 2023, there were 175,825 mortgage loan accounts in arrears exceeding 1.5% of the loan balance, marking a 5.1% increase from the previous quarter and a 16.9% rise from the third quarter of 2022, with 42.3% of the payments due for these loans received.
UK Finance reported a 7.0% increase from the previous quarter in homeowner mortgages with arrears of at least 2.5% of the outstanding balance in the fourth quarter of 2023, totaling 93,680 (1.07%) and an average increase of 53 mortgages in arrears per day over the year.
Property Transactions – ONS
The UK monthly property transactions ONS report confirmed a decline in UK residential property transactions in January 2024, with a 12% year-on-year decrease but a slight 2% increase from the previous month. Non-seasonally adjusted transactions fell by 10% year-on-year and 20% from December 2023, a typical January trend. Despite the month-to-month increase, January 2024 saw the lowest level of seasonally adjusted transactions for the month since 2013.
Money & Credit – Bank of England
The Bank of England’s latest Money and Credit – January 2024 report reveals that individuals paid off £1.1 billion in mortgage debt in January, an increase from December’s £0.9 billion. Mortgage approvals for house purchases saw a rise, moving from 51,500 in December to 55,200 in January, while remortgaging approvals remained steady at 30,900. The report also highlighted a decrease in the ‘effective’ interest rate on newly drawn mortgages, which dropped 9 basis points to 5.19% in January. Additionally, January witnessed a rise in consumer credit borrowing, with individuals borrowing £1.9 billion compared to £1.3 billion in December.
UK house prices rose by 0.7% in February, says Nationwide
Nationwide confirmed in February, after adjusting for seasonal factors, UK house prices experienced a 0.7% increase, leading to an enhancement in the annual house price growth rate to 1.2%, up from -0.2% in the prior month. Consequently, house prices are currently approximately 3% lower than the peak levels observed in the summer of 2022, once seasonal adjustments are considered.
2 and 5 Year Swap Rates
Swap rates are marginally lower compared to last week. However, it is still higher than last month. (1 Mar 2024)
| Swap Rate | 29 Feb 2024 | 01 Feb 2024 | 01 Mar 2023 |
|---|---|---|---|
| 2 Year | 4.512% | 4.158% | 4.453% |
| 5 Year | 3.964% | 3.560% | 3.989% |
