Market experts are predicting that mortgage rates of 4.5% may become the ‘new normal’ for the UK housing market.
In August 2023, the Bank of England’s base rate rose to a 16-year high of 5.25%, pushing up borrowing costs. While many hoped this was just a temporary spike, Lloyds Banking Group’s CEO, Charlie Nunn, has indicated that higher rates could be here to stay. He stated, “Markets expect interest rates won’t drop below 3.5%, which means that the new normal for mortgages will likely sit between 3.5% and 4.5%.”
Currently, the average rate for a five-year fixed mortgage stands at 4.88%—a significant jump from the pre-pandemic rates, which were around 2.5% in 2019. With these higher rates, many borrowers will need to adjust their financial plans for the future.
If you’re concerned about how rising mortgage rates may impact your finances, it’s important to seek advice and explore your options.
Your home may be repossessed if you do not keep up with repayments on your mortgage.
Sources: Rightmove Mortgageable
