The mortgage market has been a volatile place in the last year or two. Given the rapid rise in interest rates this year it’s been a challenging market for borrowers coming off the ultra-low fixed rates of recent years.
It’s hard to believe that the single most volatile period was now a whole year ago when the mini-Budget sent shockwaves through the mortgage market. As markets shifted their expectation overnight to a world where interest rates would need to rise extremely quickly, mortgage rates were sent into a frenzy of repricing and even saw some lenders temporarily withdraw from the market altogether.
L&C’s Remortgage Tracker demonstrates how quickly the market moved. Tracking the best remortgage rates from the top ten lenders in the UK our Remortgage Tracker showed how the benchmark rates leapt.
The 2- and 5-year fixed rate average had jumped by well over 1 percentage point by the end of September and by the beginning of November by more than 2 percentage points.
Beginning of September 2022
Average 2-year fixed rate 3.66%
Average 5-year fixed rate 3.58%
Beginning of October 2022
Average 2-year fixed rate 5.24%
Average 5-year fixed rate 4.97%
Beginning of November 2022
Average 2-year fixed rate 5.90%
Average 5-year fixed rate 5.67%
What now for borrowers?
The L&C tracker averages this week are lower than when they peaked in November last year despite the fact that the rate is now at 5.25% when it had only just risen to 2.25% before the mini budget speech.
21st September 2023
Average 2-year fixed rate 5.78%
Average 5-year fixed rate 5.28%
Looking Forward
After the false start of rates falling back in the early part of 2023 borrowers may now be able to look ahead with some more confidence, given the fact that fixed rates are falling and the hold in base rate signals that we’re close to, if not at, the peak.
We’ve already seen improvements in fixed rates and that looks set to continue or even accelerate in light of improved inflation figures and a hold in interest rates. After a tough year there may now at least be some light at the end of the tunnel.
