What’s happening with the Current Mortgage Rates?

- Wed 19 Jun 2024

As of June 2024, the UK mortgage market is experiencing a dynamic phase with several influencing factors:

- Average Mortgage Rates: The average interest rate for a 2-year fixed mortgage is still sitting higher than a 5 year fixed rate. These rates represent a slight increase from earlier in the year due to ongoing economic adjustments.

- Variable Rates: Standard variable rates and tracker mortgages have also seen more fluctuation. This variability is influenced by recent changes in the Bank of England's base rate.

Economic Factors Influencing Rates

Several economic factors are currently influencing mortgage interest rates in the UK:

- Bank of England Base Rate: The base rate was increased to 5.25% to combat rising inflation, which has directly impacted mortgage rates, particularly variable and tracker mortgages.

- Inflation: Inflation remains a significant concern, currently hovering around 2.3%. This is considerably lower than is has been previously. However the Bank of England have not reduced this which is maintaining higher interest rates, affecting borrowing costs.

Lending Criteria and Market Activity

- Lending Standards: Lenders have tightened their criteria slightly in response to economic uncertainties. However lenders have extended their affordability scope. Their checks are still stringent, and higher deposits are often required, especially for first-time buyers.

- Mortgage Approvals: The number of mortgage approvals has seen an increase, with recent figures showing around 61,300 approvals in March 2024, this is highest approval rate since September 2022. Which is promising as shows lenders are willing to lend even in an uncertain market. (REF details)

Upcoming General Election Impact

The forthcoming UK general election adds a layer of uncertainty to the mortgage market:

- Potential Policy Changes: Different political parties have proposed various housing and economic policies that could impact mortgage rates. Policies aimed at increasing housing supply or stimulating economic growth could lead to lower rates, while those involving significant public spending might keep rates elevated due to inflationary pressures.

- Market Sentiment: The election outcome will influence market sentiment. A decisive result may bring stability and potentially lower rates, while a hung parliament could lead to continued uncertainty and higher rates.

Conclusion

The UK mortgage market in June 2024 is characterised by moderate growth in house prices, high but stabilising interest rates, and a cautious approach from lenders. The upcoming general election adds a layer of uncertainty, with potential policy changes likely to impact the market further. Borrowers and prospective buyers should stay informed about economic developments and election outcomes to navigate the evolving mortgage landscape effectively.

For this reason get in touch with Bradleys Financial Management who can personally guide you through this challenging market on 01395 222391.

Bradleys Financial Management Ltd and Bradleys Estate Agent are two separate entities.

What’s happening with the Current Mortgage Rates?

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