MSE News: Fixed mortgage rates rising as inflation higher than expected

MSE_Kit

Interest rates on fixed mortgage deals have stopped coming down and are instead now rising again. While no one has a crystal ball, experts believe mortgage rates are likely to continue increasing while inflation remains high. So should you fix? To help navigate the market, we've spoken to mortgage brokers and analysed what's going on.

Read the full story:

'Fixed mortgage rates rising as inflation higher than expected - here's what's happening and why you might want to consider fixing now'

If you haven’t already, join the forum to reply.

smipsy

Cat's out of the bag now, with swap / gilt rates shooting up and markets pricing in at least 4 more IR raises...

Aberdeenangarse

……and to add fuel to the fire….

Nearly 800 mortgage deals have been pulled from the market amid rising concerns over higher interest rates.

UK banks and building societies have scrapped hundreds of offerings across both the residential and buy-to-let sector over the last week.

The number of residential mortgages has fallen by 373 to 5,012 since the start of last week, while the number of buy-to-let mortgages has fallen by 405 deals to 2,343.

The figures from financial data group Moneyfacts also showed the impact on mortgage rates, with the average rate on a two- and five-year fixed mortgage rising to 5.38pc and 5.05pc respectively since the start of May.

It comes after worse-than-expected inflation figures last week fuelled concerns that the Bank of England will continue to raise interest rates to keep a lid on prices.

ItisHappening

It doesn't look good as mortgage rates are only going one way. Great for savers though as they are now getting a decent return on their savings after 15 years of hardly nothing.

BOE base rate could go to 8% in 2024.

weddingringman

ItisHappening said:

It doesn't look good as mortgage rates are only going one way. Great for savers though as they are now getting a decent return on their savings after 15 years of hardly nothing.

BOE base rate could go to 8% in 2024.

Hopefully they’ll steady at 5-6% and that’ll be enough to curb the madness of people borrowing 5x their income at virtually interest free credit, with zero regard or consideration as to what happens if rates rise to the historic norm. 

Most folk these days don’t care to take the time to understand how mortgages work, or consider the consequences of not being able to afford theirs.

I’m sure the government are planning a bail out as we speak. Can’t have house prices fall to more affordable levels when that lot are all in the property game themselves. 

ItisHappening

weddingringman said:

ItisHappening said:

It doesn't look good as mortgage rates are only going one way. Great for savers though as they are now getting a decent return on their savings after 15 years of hardly nothing.

BOE base rate could go to 8% in 2024.

Hopefully they’ll steady at 5-6% and that’ll be enough to curb the madness of people borrowing 5x their income at virtually interest free credit, with zero regard or consideration as to what happens if rates rise to the historic norm. 

Most folk these days don’t care to take the time to understand how mortgages work, or consider the consequences of not being able to afford theirs.

I’m sure the government are planning a bail out as we speak. Can’t have house prices fall to more affordable levels when that lot are all in the property game themselves. 

You make some very good points. These higher interest rates have not fully worked into the economy yet. Expect to see some big drops in property prices as we go further into 2023 & 2024.

This is going to be very bad news to some people on here as you can tell they get very touchy about this.

Strummer22

ItisHappening said:

It doesn't look good as mortgage rates are only going one way. Great for savers though as they are now getting a decent return on their savings after 15 years of hardly nothing.

BOE base rate could go to 8% in 2024.

What's that 8% based on though? The energy price shock is already dropping out of the annual inflation figures, and the food and commodity price shock will drop out around Q2 2024. Barring further shocks (which of course is speculation), interest rate rises would be needed to counter inflation due to wage growth and consumer product price rises. Would 8% really be necessary to do that, when the full effect of the rate rises already implemented has not yet been felt?  

Also, savers are still getting stuffed, I don't think there are any savings accounts giving above-inflation returns. Savers are worse off than when savings rates were 0.15% and inflation 1.5%. Yes the amount of money in the bank has gone up a bit, but you can't buy as much with it. 

ItisHappening

Strummer22 said:

ItisHappening said:

It doesn't look good as mortgage rates are only going one way. Great for savers though as they are now getting a decent return on their savings after 15 years of hardly nothing.

BOE base rate could go to 8% in 2024.

What's that 8% based on though? The energy price shock is already dropping out of the annual inflation figures, and the food and commodity price shock will drop out around Q2 2024. Barring further shocks (which of course is speculation), interest rate rises would be needed to counter inflation due to wage growth and consumer product price rises. Would 8% really be necessary to do that, when the full effect of the rate rises already implemented has not yet been felt?  

Also, savers are still getting stuffed, I don't think there are any savings accounts giving above-inflation returns. Savers are worse off than when savings rates were 0.15% and inflation 1.5%. Yes the amount of money in the bank has gone up a bit, but you can't buy as much with it. 

Inflation was around 8% before the energy crisis. High inflation is baked in now due to expanding the money supply with all of the QE.

Strummer22

Inflation was 5.5% before the energy crisis (Feb 22 figure). 

weddingringman

Strummer22 said:

ItisHappening said:

It doesn't look good as mortgage rates are only going one way. Great for savers though as they are now getting a decent return on their savings after 15 years of hardly nothing.

BOE base rate could go to 8% in 2024.

What's that 8% based on though? The energy price shock is already dropping out of the annual inflation figures, and the food and commodity price shock will drop out around Q2 2024. Barring further shocks (which of course is speculation), interest rate rises would be needed to counter inflation due to wage growth and consumer product price rises. Would 8% really be necessary to do that, when the full effect of the rate rises already implemented has not yet been felt?  

Also, savers are still getting stuffed, I don't think there are any savings accounts giving above-inflation returns. Savers are worse off than when savings rates were 0.15% and inflation 1.5%. Yes the amount of money in the bank has gone up a bit, but you can't buy as much with it. 

With respect I think you’re letting the mainstream media and government taint the real costs of inflation that are frankly engulfing the UK.

Days out with my kids (tickets/food) have literally doubled in cost over the last 2-3 years. Food is easily up 50% in a similar time frame. Look at utilises including streaming services, broadband, insurance etc. All up far more than 8%. 

Need to carry out some home repairs? Some materials have increased 2 or 3 fold. Getting folk in to do the work equally now far more costly. 

Rising costs are everywhere. 

housebuyer143

weddingringman said:

Strummer22 said:

ItisHappening said:

It doesn't look good as mortgage rates are only going one way. Great for savers though as they are now getting a decent return on their savings after 15 years of hardly nothing.

BOE base rate could go to 8% in 2024.

What's that 8% based on though? The energy price shock is already dropping out of the annual inflation figures, and the food and commodity price shock will drop out around Q2 2024. Barring further shocks (which of course is speculation), interest rate rises would be needed to counter inflation due to wage growth and consumer product price rises. Would 8% really be necessary to do that, when the full effect of the rate rises already implemented has not yet been felt?  

Also, savers are still getting stuffed, I don't think there are any savings accounts giving above-inflation returns. Savers are worse off than when savings rates were 0.15% and inflation 1.5%. Yes the amount of money in the bank has gone up a bit, but you can't buy as much with it. 

With respect I think you’re letting the mainstream media and government taint the real costs of inflation that are frankly engulfing the UK.

Days out with my kids (tickets/food) have literally doubled in cost over the last 2-3 years. Food is easily up 50% in a similar time frame. Look at utilises including streaming services, broadband, insurance etc. All up far more than 8%. 

Need to carry out some home repairs? Some materials have increased 2 or 3 fold. Getting folk in to do the work equally now far more costly. 

Rising costs are everywhere. 

Definitely, they are delusional if they think inflation hasn't rooted already.