As a homeowner or property investor, a question you might be asking yourself is how mortgage rates might be changing throughout 2023. If you’re looking to buy or nearing the end of your current mortgage deal, you’ll be keen to know and understand what to expect.
However, before delving into what may occur within the mortgage market, it’s worth taking a brief look back at 2022 to understand what has led to the current mortgage trends.
Looking back on 2022
Three increases to the Bank of England’s base rate from September to December 2022 (bringing the rate to 3.5% by the end of the year) led to major mortgage lenders increasing their rates in response to the uncertainty in the economy. For those not on a fixed deal, these higher rates had a knock on effect of higher monthly mortgage payments for many customers.^
Exploring the current market
A new year and more stability in Government seems to have brought new confidence to the mortgage market as higher rates immediately after the mini-budget now seem to be levelling off, with lots of lenders reducing their fixed deals*. The average cost of fixed rate mortgages has since been gradually decreasing as lenders become more competitive in their offerings in order to attract new customers. The Bank of England Governor, Andrew Bailey recently reported ‘we have seen that new fixed-rate mortgages have come down from the highs in October’ and that this correction would ‘benefit people seeking mortgages’.*
The average rate for a 2-year fixed mortgage dropped to 5.53% (correct at 20th January 2023) and the average for a 5-year fixed mortgage rate fell to 5.3% (saving the homeowner approximately £115 to £204 a month on a £200,000 loan)*. When you compare this with average Standard Variable Rates of 6.64%, it really highlights the importance of seeking out advice to ensure when you remortgage, you are getting the very best deal for your circumstances**.