UK mortgage rates go up right after Bank of England drops interest rates
Major lenders increased their fixed-rate mortgages despite Bank of Englandʼs recent rate cut. Market experts point to Budget decisions and possible US political changes as key factors for UK home-loans future
Major UK lenders dont follow Bank of Englands latest move - Virgin Money and Halifax raised their fixed-rate mortgages by 0.25pc right after central bank cut its rate to 4.75pc
The unexpected increase comes after last weeks Budget presentation by Rachel Reeves which affected UK government borrowing costs and swap-rates (the key factor in fixed-rate mortgage pricing). Market experts suggest next rate reduction wont happen until early-2025; with only 2-3 cuts expected that year
Nicholas Mendes from John Charcol points out that market predictions have shifted down - fewer rate cuts are now expected. The Office for Budget Responsibility shows interesting numbers: mortgage rates might reach 3.7pc by years end and jump to 4.5pc by 27
Property market faces new challenges says Adrian Anderson of Anderson Harris: “The Trump inflation factor along with UK Budget market reaction means well be paying higher rates for longer“. Experts worry that US political changes could slow down UK rate cuts - last summer 16 Nobel-winners warned about inflation risks
Current fixed-rate mortgages show interesting trends; two-year deals average at 5.42pc while five-year options sit at 5.13pc. Chris Sykes of Private Finance explains: US inflation changes could create a ripple-effect forcing UK rates to stay up. However Andrew Goodwin from Oxford Economics thinks rates will drop significantly by next year-end
