This week, the Bank of England’s Monetary Policy Committee (MPC) made a bold decision: to raise interest rates for the tenth time in a row. In light of an expected shorter and sharper recession than anticipated, this 0.5% jump brings us to 4%, its highest level since 2006! This change will likely lead to ripples throughout mortgage markets; however, lenders have already been making their own adjustments by dropping prices and introducing new products before MPC even acted – proving just how important it is stay ahead of market trends. The bank now predicts that inflation could drop as low as 1% next year while currently standing at 10.5%.
When the Bank of England adjusts its base rate, there can be major impacts on both borrowers and savers. Fortunately, mortgage market experts are staying optimistic when it comes to potential mortgages – deals have been getting cheaper since November despite rising interest rates in recent months!
For those looking for a mortgage, it currently looks like fixed-term products are the way to go. With average SVRs shooting up from 6.64% last month to 6.84%, opting for two or five-year fix rates could help you save money in both short and long terms – the current averages being 5.44% & 5.20% (down from 5.63% last month). So while a standard variable rate provides flexibility and is still an option available, taking advantage of these longer-term savings just makes more cents!
The buy-to-let mortgage market has seen its fair share of ups and downs, with options disappearing from shelves following last year’s mini-budget before being reintroduced as confidence returned. Although affordability concerns have been driven higher by increasing rates, strong tenant demand across the UK is creating much-needed optimism for a successful 2021. Angus Stewart, chief executive at Property Master believes lenders are becoming more competitive once again – good news indeed!
All in all despite the latest base rate hike and ongoing cost of living difficulties being faced by many, there is greater economic stability now than there was a few months ago, which is positively impacting the mortgage market.