The property and mortgage market has been in a state of change, to put it mildly, since late last year. Those heady days of fixed rate deals under 2% seem a long time ago, when really they were available in March 2022. The Bank of England base rate has been climbing inexorably since, in an attempt to combat inflation, the government has said.
This has meant pressure for homeowners, landlords and portfolio landlords who have seen, or have yet to see, their low fixed rate deals end and new, much higher, interest-only or capital repayment payments take their place. This has led to reduced property selling activity, many landlords selling their properties and rents increase.
Leeds has not been immune to this either, with many estate agents seeing reduced activity in buying and greater urgency to sell, as interest rates have climbed.
But.
This past week has seen fixed rate deals fall to sub 5% – miles away from the heady days of 1.99% deals – but, at last, some sense that normality may be returning to the property market.
Just this week, a five-year fixed-rate deal priced at 4.99% was launched by The Mortgage Works, a division of Nationwide building society, which brokers said was the first sub-5% fixed deal they had seen for several months. It is thought it is the first fixed-rate product priced at below that level since late June. It is though just a buy to let, with stringent LTV criteria of 55%.
That optimism may be short-lived however – a Bank of England rate rise next week – a decision will be announced on 21 September – could slow further reductions. The Bank’s base rate is now at 5.25%, and many commentators anticipate a rise to 5.5%. We watch with interest.
Diarmuid Phoenix, an adviser at Mint Mortgages & Protection, said:
“Seeing the return of rates under the 5% bracket in line with falling swap rates should hopefully give a boost of confidence to borrowers who have been living in fear of the end of their current fixed-rate deals, as well as those who have been sitting on the fence waiting for rates to come down before purchasing.”
Three big lenders however are widely predicted to be eyeing up mortgage interest rate reductions:
- Halifax is expected to make an announcement today (Friday 15th September 2023)
- Santander has already offered a 0.4% reduction on certain deals
- Coventry (Britain’s 8th biggest lender) is following Halifax with an announcement expected today.
Nick Mendes of John Charcol says Nationwide and Coventry have both had fixed rate deals at or close to the top of the tables in recent weeks:
“Coventry has quickly revised its fixed rates after Nationwide building society gave notice of rate reductions yesterday.
“Both Nationwide and Coventry are leading the way in fixed rate pricing so to see this quick announcement is encouraging and suggests strong competition – which is good for borrowers.”
