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UK Mortgage Rates Still Rising


Friday, May 9, 2014
UK Mortgage Rates Rising At Fastest Rate For Two Years

UK Mortgage Rates Rising At Fastest Rate For Two Years

UK Mortgage Rates Rising At Fastest Rate For Two Years

UK mortgage rates  in both the private residential and Buy-to-let markets are rising at their fastest pace for over two years as speculation continues to grow over when the Bank of England will increase its base rate.
Although very few economists expect the Bank of England (BoE) to raise the record low interest rate before 2015, some mortgage lenders are already increasing their private residential and Buy-to-let interest rates in anticipation of any BoE action.

The Government’s Help-to-buy scheme and the end of the Funding for Lending Scheme, providing consumers with cheap loans for mortgages, may also be forcing lenders to increase residential and buy-to-let mortgage rates.

According to new figures from Moneyfacts.co.uk, the average two-year fixed-rate mortgage across all Loan-To-Value mortgage products increased by 0.09% in April 2014, the fastest monthly increase in the average rate since February 2012 when mortgage interest rates rose by 0.13%.Financial markets are becoming increasingly volatile, with weekly increases and falls, in a response to continual speculation of when the Bank of England will increase the base interest rate, due to many banks continued reluctance to borrow money at increased rates.

Moneyfacts editor Sylvia Waycot said “It is a very different mortgage market to four months ago when the government withdrew its controversial Funding for Lending scheme, thereby cutting banks access to cheap money. Banks are facing scrutiny over balance sheets via stress tests and capital holding requirements, plus there are increased costs of regulation and processes such as the mortgage market review, (MMR). The two-year fixed rate mortgage has been the favoured option for the risk-averse borrower who enjoys the knowledge that they know what their mortgage will cost each month. However, as these deals have come to an end, many borrowers have reverted to their lender’s SVR, as in many cases it has proved a cheaper alternative.Don’t make the mistake of thinking we need a change to base rate to increase the cost of mortgages, as prices are creeping upwards now. So if fixed rates are your preference, now is the time to fix.”

Buy-To-Let mortgages are booming with more property investors and landlords expanding rental property portfolios as tenant demand remains strong in many UK regions. Many investors are taking advantage of preferential rates while they can, before the financial markets are once again thrown into turmoil by changes to borrowing rates.


This was written by Mike Clarke. Posted on at 12:56 pm. Filed under Buy To Let. Tagged , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.