If you’ve been keeping an eye on the news, you might have noticed a curious shift: while the Bank of England recently reduced the base rate to 4.75%, mortgage interest rates have started creeping up again. This might seem counterintuitive—shouldn’t lower base rates lead to lower mortgage rates? However, the story is more complex.
Let’s unpack what’s going on and, importantly, how we can help you navigate this uncertain environment.
Why Are Mortgage Rates Rising Despite the Base Rate Drop?
The base rate is a key factor in determining mortgage rates, but it’s not the only one. Here are some reasons why mortgage rates are increasing, even as the base rate has fallen:
- Fiscal Policy and the Budget
The recent Autumn Budget introduced increased government borrowing and spending plans. This type of fiscal policy often drives up bond yields—the interest rates the government pays to borrow money. Since lenders use bond yields as a benchmark for setting mortgage rates, any increase in yields can push mortgage rates higher.
In short, while the base rate might be lower, the budget’s expansive fiscal measures are exerting upward pressure on borrowing costs, including for mortgages.
- Inflationary Concerns
Although inflation has started to ease, the market remains wary. Fiscal policies that inject more money into the economy could reignite inflationary pressures. Lenders are pre-emptively adjusting their rates to protect their returns in case inflation rises again.
Even the Bank of England has hinted that inflation could be influenced by the recent budget, which has created a ripple effect on the housing market.
- Political Uncertainty
The recent general election brought a shift in economic strategies and fiscal priorities. Political transitions often create uncertainty in financial markets, and uncertainty typically leads to higher borrowing costs. Lenders are hedging against the risk of further economic or policy shifts by increasing mortgage rates.
- Lender Strategies
Finally, individual lenders have their own reasons for raising rates. Some lenders are trying to manage demand or prepare for the potential of higher costs in the future. Recent announcements from major lenders, including HSBC, Barclays, Santander, and Nationwide, show that they’ve adjusted their mortgage rates upward despite the base rate cut. These moves reflect the broader market dynamics and their specific business strategies.
What Does This Mean for You?
Rising mortgage rates affect everyone, from first-time buyers to homeowners looking to remortgage. If you’re planning to buy a property or remortgage soon, it’s crucial to act quickly. The good news? You don’t need to navigate these turbulent waters alone.
How We Can Help
As mortgage brokers, we’re here to simplify this process and help you secure the best deal possible. Here’s how:
Rate Locking: Even if you’re not ready to move or remortgage today, we can help you lock in a competitive rate for up to 90 days. This gives you peace of mind and protection from further increases while you finalise your plans.
Expert Guidance: With so many factors influencing mortgage rates, it can feel overwhelming. We’ll take the time to explain your options, tailoring our advice to your unique situation.
Access to Exclusive Deals: We work with a wide range of lenders, including those offering exclusive rates not available directly to the public. Our extensive network allows us to find deals that fit your needs.
Support Through the Process: From the initial application to liaising with lenders, we handle the nitty-gritty details so you can focus on what matters most—finding your dream home or managing your finances effectively.
Why Locking in a Rate Now Is a Smart Move
Mortgage rates could continue to rise as markets react to inflation, fiscal policies, and economic uncertainty. By locking in a rate now, you’re effectively shielding yourself from potential increases. This is especially important if:
You’re House Hunting: If you’re actively searching for a property, securing a rate now means you’ll avoid higher rates later when you’re ready to complete your purchase.
Your Fixed Rate Is Ending Soon: For those approaching the end of a fixed-rate deal, it’s wise to plan ahead. Starting the remortgaging process early gives you more options and flexibility.
You’re Worried About Future Costs: If you’re unsure how rising rates might impact your budget, locking in a rate provides stability and allows you to plan with confidence.
Take Action Today
In today’s fast-moving market, waiting could cost you. Whether you’re buying your first home, moving up the property ladder, or preparing to remortgage, we’re here to help you stay ahead of the curve.
By working with us, you’ll gain access to expert advice, exclusive deals, and the opportunity to secure a great rate before they rise further. Don’t let uncertainty hold you back—let’s turn it into an opportunity.
Final Thoughts
Interest rates may be unpredictable, but your financial strategy doesn’t have to be. With the right guidance, you can navigate these changes and make informed decisions that protect your financial future.
Ready to take the next step? Contact us today to discuss your options and secure your rate. Let’s make sure you’re prepared for whatever the market brings.
Remember, rates locked today can last for up to 90 days, giving you plenty of time to finalise your plans. Don’t miss the chance to secure a competitive deal—reach out to us now!