The money markets are adjusting to a changing political outlook, where stability in the UK’s public finances is an imperative.
The big unknown that remains is how much further central banks will need to raise interest rates to bring inflation back under control.
Investment professionals expect the Bank of England to take a slower and more cautious approach to rate setting at tomorrow’s meeting (3 November) and going forward.
The market is pricing a 75 basis point hike from the Bank of England at the November meeting, down from 105 basis points that was at one point priced due to the turmoil of the Mini Budget.
Deutsche Bank are predicting the decision for a 0.75bps increase to 3% will not be unanimous, and anticipates two members voting for a smaller 50bps hike.
ING meanwhile believe a 50bp hike is “narrowly more likely,” according to a note published on the 28th October. ING pointed out investors are still expecting the bank rate to peak around 5% next year.
Zoopla, one of the UK’s largest property portals anticipates Mortgage rates to fall to 4-5% next year claiming this is likely to be the new norm.
What does this mean for you?
We have already seen a large number of lenders return to the market and many have begun to reduce mortgage rates on key products including residential and buy to let.
The stability in the current market signals that this might be a good time to consider a longer term fixed rate mortgage. Opting for a fixed mortgage now will ensure that your monthly repayments will stay locked in for an agreed upon set of time. This may be attractive to you if you want long term stability, especially with mortgage rates still likely to climb.
How we can help
Rates are changing rapidly, however, there is no guarantee that deals will last and not be replaced with mortgages charging higher rates.
We recommend you arrange to speak to one of our award winning mortgage brokers. They’ll be able to review your circumstances and provide you with options that suit you.
If you would like to discuss your current mortgage or have a large portfolio that you’d like us to review, speak to a member of the team or our senior broker, Danny O’Keeffe on 0208 364 3444 alternatively schedule a call back by clicking on the button below.
Rents Fall 11% As Markets Cool in October
Average rents across England fell by 11% to £1,111 during October, taking the “intense heat” out of the tenancy market, says Goodlord.
Rents slipped to their lowest levels since June, according to the lettings platform’s latest Rental Index, which adds that voids rose by 20% to 18 days from 15.
However, rental prices remain up by 10% on average, when compared to 2021 prices, the report points out.
UK House Prices Fall as Mortgage Rate Hike Hits Buying Power
Higher mortgage rates could take up to 5% off residential property prices next year, according to Zoopla.
The recent spike in mortgage rates represents the largest interest rate shock for new buyers since the late 1980s. The drop in new buyer interest over the last month has been spread across all UK markets as limited buyers with cheap mortgage offers remain, with the biggest drops in new buyer interest in the South East (-40%).