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What next for mortgage rates with Gilt yields and swaps on the rise?

Journalist: Newspage News Desk

ended 01. May 2024

This morning Gilt yields and SONIA swaps have increased. Given they're a useful proxy for fixed-rate mortgage pricing, are we likely to see further rate hikes by lenders in the coming days?

  • How will further increases affect the property market when it's meant to be in full swing?
  • Could we see more sellers desperate to sell cut their asking prices in response to higher mortgage rates?
  • What advice are you giving to customers who are actively looking to buy and how are they adjusting their budgets to take account of higher mortgage payments?

10 responses from the Newspage community

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Editor
Darryl DhofferVerified
Founder at The Mortgage Geezer
With UK Gilts and Sonia Swap Rates on the rise, the affect, will most certainly continue the theme of lender rate rises, which will dampen the housing purchase market yet again, if rates continue to escalate...and to resolve this, The Government continue to sit on their hands.
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Ben PerksVerified
Managing Director at Orchard Financial Advisers
Fixed rates are heavily aligned with swap rates, so unfortunately further increases are inevitable and probably unavoidable. In fairness, Lenders are pretty good at passing on savings to borrowers. So if swap rates reduce, the rates available to borrowers will improve also. This issue falls firmly at the feet of Jeremy Hunt and Andrew Bailey, who have been eerily quiet recently. There needs to be a significant improvement in the UKs economic stability and the Andy and his mates need to have the bravery to drop the base rate before our friends in europe and across the pond.
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Rohit KohliVerified
Director at The Mortgage Stop
With Gilts and Swaps rising it means more misery for borrowers, in particular those who have delayed deciding on their remortgage from the more optimistic outlook at the start of the year in the hope that rates would continue their downward trend. We can expect lenders to continue the upward momentum from recent weeks especially as it looks increasingly likely that any reduction in the base rate is now going to be later and smaller.
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Dariusz KarpowiczVerified
Director at Albion Financial Advice
With rising Gilt yields and SONIA swaps this morning, the mortgage market is poised for more rate hikes. These increases are a response by lenders to manage risks associated with higher long-term borrowing costs. This situation suggests a continued uptrend in mortgage rates in the immediate future, which could dampen the property market's usual activity during its peak season. Sellers might indeed feel compelled to lower their prices if the higher rates begin to push buyers out of the market. For those looking to buy, I'm advising them to be cautious with their budget planning, factoring in the possibility of further rate increases. This is a time to prioritize affordability and ensure any new mortgage commitments remain manageable against the backdrop of a potentially unstable market.
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Michelle LawsonVerified
Director at Lawson Financial
Rollercoaster rates are becoming the new norm. Lenders will be pricing these increases in but we aren't out of the woods by any means. Anyone looking to secure a mortgage can do so now and this is their worst case scenario. It will protect them against any further increases however a good broker will monitor the market and change them to a better product where time permits if one becomes available.
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Elliott CulleyVerified
Director at Switch Mortgage Finance
There is no consistency with the market right now and this has lead to mortgage rates yo yoing over the last year and a half. It leads to a very difficult market especially for first time buyers who cannot secure a rate until they find a property. Depending on how long that takes, rates could have improved or could then be far more. Borrowers need to assess the rate and think can i afford to pay the monthly payment at this rate. If they can then they should consider buying if not then they should wait. This is the only advice you can give right now in these turbulent times. Most want to know when rates will reduce and some want to wait for that to begin, but there is no guarantee rates will fall.
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Elliott BensonVerified
Owner at Sett Mortgages
As we have seen this before, this will be a temporary spike before we see rates come back down. If we can get a reduction at the next Bank of England Base Rate meeting, this should calm things down a bit and we should see things improve.

If you are looking to buy currently, keep in touch with your broker and see if payments are changing, otherwise if you have had an offer accepted, book in to apply ASAP
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Graham CoxVerified
Director at Bridging Hub
With the Nationwide announcing property prices fell 0.4% month-on-month in April and swap rates still creeping up, the short-term outlook is for higher mortgage rates and continued falling house prices. We're now in peak house-buying season, and I suspect many vendors will be forced to drop prices further with a glut of properties on the market. Overpriced property and high mortgage rates do not a happy marriage make.
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Scott Taylor-Barr0
Principal Adviser at Barnsdale Financial Management
Mortgage interest rates at current market levels, are slowly starting to be accepted as the new normal and talk of people expecting a return to sub 2% rates is diminishing. As people get used to this fact, we are seeing more people return to their plans to move or extend and so start mortgage conversations. One of the things I have noticed though, is a scaling back of ambition, so the extensions being discussed are a little bit smaller and the properties being purchased are not quite as big a leap up the ladder as they may have been a few years ago. This is simply people re-adjusting as to what their budgeted monthly commitment buys them in the current marketplace; to a degree it is a return to a pre-ultralow interest rates market, where a first-time buyer would look at a 2 or 3 bed terrace property and not a brand new 4 bed detached house, boosted by a help-to-buy equity loan.
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Gary Bush0
Financial Adviser at MortgageShop.com
Fixed Mortgage Rates, the only way is up baby. With Gilts and Swaps all heading north at the moment, these are truly troubling times for property purchasers and those whose existing rate is up for renewal. With the high level of demand from purchasers, I don't see any major price reductions being justified for decent homes. Our advice is to grab a no-redemption penalty deal fast until the next set of UK data comes out that might restart the mortgage rate decrease activity.