Copy article

Mortgage rates keep rising as two-year fixed average hits 6.53%

Journalist: Frances Ivens, Telegraph

ended 18. October 2022

Journalist for This is Money/ Mail Online looking for commentary on fixed rate mortgages increasing (2-yr fix now 6.53% and 5-yr now 6.36%).

Are they likely to continue rising despite the government U-turns over the past few days? 

Will we see more lenders following NatWest in hiking rates?

 

 

11 responses from the Newspage community

Copy all

Copy

Editor
Craig Fish
Director at Lodestone Mortgages
The rates available to clients do vary dependent upon the Loan to value, but we are seeing that the most expensive products are 2-year fixes, and the cheapest are 2-year trackers. Trackers are something that most brokers would probably never have previously considered for clients, but are suddenly becoming a real option, especially considering that there is a thought that the Bank of England may drop rates back a bit when inflation is under control. In the short term, I'm not really expecting to see much change, despite a couple of lenders increasing their rates in recent days. I think the next BOE base rate rise is already priced in, and this may delay any further changes from lenders. Now is the time for brokers to show their real worth and provide real tangible advice to clients based on their circumstances.
Copy

Editor
Imran Hussain
Director at Harmony Financial Services
We are likely to see rates bounce around for the next few weeks, with lenders who are struggling with capacity such as natwest who may price themselves accordingly to reducuce volumes whilst they catch up with their backlog some lenders have reduced their rates and others may follow suit but I expect another few weeks of volitily with rates moving faster than a wink of an eye.
Copy

Editor
Aaron Strutt
Product and Communications Director at Trinity Financial
Fixed rates were always going to get more expensive but the mini-budget dramatically accelerated the price rises. More people are asking about the cheap tracker and discount rates. Some of the five-year fixes are closer to 5.5 per cent but even then borrowers do not want to lock into them, especially if there is a chance fixes will come down a bit over the coming weeks.
Copy

Editor
Bob Singh
Founder at Chess Mortgages
The Banks are playing catch up and planned these hikes before recent events led to the yields falling on the bond markets One lender today has lowered its next raft of products with cuts of almost 0.5%. As the markets settle more lenders will follow suit The current hikes will do little to stimulate the markets and with news that house price rises in Scotland are falling this will send a caution to us across the border that a similar fate awaits here The revised affordability test and Buy to Let stress tests will undoubtably dampen demand going forward which will impact house prices in the coming months The only thing shoring up prices is the shortage of supply but an exodus of landlords can’t be ruled out as Section 24 changes coupled with sky high interest rates lead landlords to sell up
Copy

Premium
Gaurav Shukla
Managing Director at Home Me Mortgages
The government U-turn won’t have much of a positive impact on mortgage rates as we are still in the predicament of high inflation. Bank of England will need to increase the base rate in the next MPC meeting early November. Swap rates are still high so we know lenders will not reduce rates, yet. There is still some uncertainty in the markets which will be the case as long as Liz Truss is still PM. I’m afraid we will still see increased rates, not at the speed in which it has been recently, but they will still increase. 2023 will be an interesting year for mortgage rates as a lot depends on the market and inflation. The one thing Jeremy Hunt was not wrong about was that interest rates will still increase.
Copy

James Miles
Director - Mortgage Adviser at The Mortgage Quarter
It looks like NatWest are hiking their interest rates due to their shocking service standards and they cannot cope with any more business. With the the Government reversals we can expect lower fixed rates coming but banks will introduce these at a snails place to top up those fat cat bonuses.
Copy

Mark Robinson
Managing Director at Albion Forest Mortgages
I don't want to give false hope, but I have had a notification from one lender that they are reducing rates tomorrow. With several others returning products that they had previously withdrawn. This could all be coincidence, but wouldn't it be lovely if rates went down as quickly as they went up after the mini budget?
Copy

Ricky Dosanjh
Director at Reeds Financial
All we hear these days is 'rate increase... rate increase...' and it's hard to tell when it will stop but I believe it will start to slow and reduce. Lenders are swamped with applications, and I think they've increased rates to try and deter borrowers which only caused panic and further applications. Once service levels are manageable we should see decreases.
Copy

Ian Hewett
Founder at The Bearded Mortgage Broker
Some lenders have increased rates exponentially to reduce the amount of applications as they currently cannot cope with the volume. This is standard practice in this industry and is done to basically strangle their current workflow and allow time for them to catch up, re-asses the market and change their rates accordingly. Some lenders will now stabilse and others may reduce slightly but the impact wont be felt until the 3rd of November, when the Bank of England review inflation again. This will be a key time and will allow them to asses in good detail the impact of the budgetary U turn by Jeremy Hunt.
Copy

Graham Cox
Director at Bridging Hub
The volatility in UK gilt yields continues, fuelled by the unending political instability in Westminster. In turn, lenders are having to price fixed rate deals at a level that allows some wiggle room for the unpredictability of swap rates. They're also beginning to factor in the hefty base rate rise expected on November 3rd. The other factor is some mortgage providers have become swamped with applications since the mini-budget, as many of the smaller lenders pulled out. Now they are pricing fixed-rate deals to slow applications down.
Copy

Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
Yesterday’s market reaction to Hunt’s announcement led to a fall in yields, but will only be temporary as market volatility is still present. But gilt prices remain high and have still a long way to go before diving back to the level when Truss was formally appointed as PM in early September. Therefore, this will continue to impact mortgage costs along with the effect of the MPC’s anticipated interest rate hike in November.