August 2nd, 2023.
Lenders Cut Fixed Mortgage Deals – Rates Close to Peaking
Several major lenders, including Nationwide, HSBC, and TSB, have recently reduced rates on their fixed mortgage deals, suggesting that the surge in home loan costs may be reaching its peak at nearly 7%.
These rate cuts come in the wake of last week’s data, revealing that inflation decreased more than anticipated in June. This development has helped to stabilize financial markets and lower expectations regarding the number of required interest rate increases to control inflation.
The Bank of England is projected to raise rates for the 14th consecutive time on Wednesday, with a quarter-point increase to 5.25%. However, investors now believe that rates will likely reach their peak at 5.75% by next March, a significant shift from the previous expectation of UK interest rates climbing as high as 6.5%.
This change in forecast alleviates concerns that it would have driven home loan rates even higher for British borrowers, many of whom were on deals with rates below 2%.
The escalating housing costs are adding further strain to Britons who are already struggling to manage increased food and energy expenses. According to an official poll published on Friday, 45% of individuals paying rent or a mortgage experienced a rise in costs over the past six months.
The July poll conducted by the Office for National Statistics also revealed that 40% of respondents were finding it difficult to meet these payments, marking a significant increase from 31% reported a year ago.
The average two-year fixed-rate mortgage has been on a relentless climb, reaching 6.86% in the middle of June, as reported by data firm Moneyfacts. However, there has been a slight improvement since then, with the rate edging down to 6.83% last Thursday and further decreasing to 6.81% on the Friday.
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(source: The Guardian)