Mortgage rates in the UK increased again over the past seven days, though growth slowed according to a Rightmove tracker, as lenders feel the pressure to ‘remain competitive’ with all eyes on what the Bank of England has in store.
Threadneedle Street is once again expected to lift rates by 25 basis points a week on Thursday. It would take the benchmark bank rate to 4.75% from the current 4.50%.
‘As expected we’ve seen another significant increase in average rates across all loan-to-value ranges. The jump in average rates is actually smaller than last week, however lender behaviour and the uncertainty surrounding the market at the moment suggests they will increase again, the extent of which hangs on the outcome of the upcoming inflation figures and the Bank of England’s announcement on 22nd June,’ Rightmove mortgage analyst Matt Smith commented.
In the key five-year fixed term mortgages, with an 85% loan-to-value, the rate ticked up to 5.20% on June 13 from 5.02% a week prior. Up by 0.18%, Rightmove’s figures growth has slowed from a more robust 0.47% in the week ended June 6.
For five-year fixed term mortgages with a 60% loan-to-value, the average rate moved to 4.90% from 4.68%. Growth slowed to 0.22% from 0.30%.
A year ago, those mortgage rates stood at 3.08% and 2.77%, respectively.
An LTV ratio is what a house buyer borrows against what they put down as a deposit.
Rightmove’s Smith added: ‘Looking forward, while we expect lenders to increase rates again it’s clear that they are grappling with the pressure to both remain competitive, but also not be an outlier. For those looking to take out a mortgage right now, it is likely to feel very frantic to secure the best rate possible quickly, and next week’s news has a lot of bearing on whether this period of uncertainty is set to continue for longer, or whether some stability may slowly come back to the market.’
With another robust set of UK jobless data earlier on Tuesday, there is every chance the Bank of England is not done with its rate hikes yet, so borrowing costs may rise further.
The UK unemployment rate edged downward in the three months to April, while pay growth picked up.
Unemployment edged down to 3.8% in the three months to April from 3.9% in the three months to March. Market consensus, as cited by FXStreet, had expected unemployment to rise to 4.0%.
In the three months to April, annual growth in average total pay, including bonuses, picked up to 6.5% from 6.1% in the three months to March. This came above market consensus, which expected pay growth to hold steady.
Excluding bonuses, annual average earnings growth was 7.2% in the three months to April, compared to 6.8% in the previous three months. This was above expectations of 6.9% growth.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
