Some lenders begin repricing rates upwards again

In the latest financial update, the Bank of England announced on the 1st of February that they have voted to maintain the base interest rate at 5.25% for the fourth consecutive period, maintaining a 16-year high.

Interest Rate Decisions: A Three-Way Split
The Monetary Policy Committee’s recent meeting revealed a divided stance towards the future of interest rates, with two members advocating for an increase but only one in favour of a cut. Many economists were surprised to see a more hawkish stance from committee members and believe this could impact mortgage rate expectations going forward.

Lenders Make Adjustments
In response to the Bank of England’s decision to hold the current rate, several major lenders have begun revising their residential fixed-rate deals upwards. This shift aligns with the growing consensus that interest rates may remain elevated for an extended period. Among those adjusting their offerings are HSBC, Halifax, and Coventry, reflecting a broader market re-calibration.

Nationwide, in particular, has announced an increase of up to 0.3% on its fixed rates, affecting both two-year and five-year deals. This adjustment, implemented last Friday, signifies the lender’s response to the central bank’s rate hold and the anticipated trajectory of the mortgage market.

What This Means for You
If your mortgage product is coming up for renewal in the next 6 months, we encourage you to get in touch with our mortgage brokers. Lenders are likely to continue to adjust their rates over the coming weeks before settling on a rate range before the Bank of England’s next MPC meeting which is due to be held on 21 March 2024.

Speak to our award winning mortgage brokers
Whether you’re considering buying a new property, remortgaging, or just seeking advice on the best course of action in this volatile market, our team is here to assist you. Get in touch now on 0208 364 3444 alternatively click here to schedule a free consultation call. Be sure to ask about our Flexi-Lock service to ensure you can lock in the best rate.

Average UK rent falls for third consecutive month
According to HomeLet, average rental prices in the UK have dropped for a third consecutive month, this time by -0.6%.

The HomeLet Rental Index, which is released monthly and analyses archived rents to paint a general picture of the UK market, has revealed that rental prices fell in most UK regions in January; with London and Northern Ireland seeing the biggest drops of -2.2% and -2.3% respectively. This is in contrast to the Midlands; with both the East and West Midlands reporting rent hikes, unlike the rest of the country this month.

Successive price drops across the nation could mean that tenants are saving up to £50pcm on rent compared to just a few months ago. However, experts say this isn’t set to last.

Although the current downward trend in rental prices will go some way towards mitigating defaults and taking pressure off the average tenant, the wider context is that rental prices are still +7.51% up since February 2023, and a shocking +18.4% since February 2022; the equivalent of £200pcm more in two years.

UK house prices rise at strongest rate in a year
The outlook for the UK housing market is “more positive” as prices improved at their strongest rate in a year, according to Nationwide.

The building society’s index found that the average house price had increased by 0.7% in January on the previous month – a significant turnaround from the December figures, which showed a 1.8% decline in prices.

The average UK house price was £257,656 in January, and was down 0.2% on a year earlier.

Robert Gardner, Nationwide’s chief economist, said: “While a rapid rebound in activity or house prices in 2024 appears unlikely, the outlook is looking a little more positive.”

He said this had been driven by “encouraging signs” for buyers with mortgage rates continuing to trend down.

He added: “This follows a shift in view among investors around the future path of [interest rates], with investors becoming more optimistic that the Bank of England will lower rates in the years ahead.”

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