Average two-year mortgage rate close to 6%
Average two-year mortgage rate close to 6%
Lenders have been increasing the cost of new fixed-rate deals rapidly during a tumultuous week.
Wonder what has caused the sudden rise in the last few months
Brokers have described a vicious circle of lenders putting up rates at short-notice, then borrowers grabbing deals, leaving lenders inundated and having to pull or raise rates again.
Apparently it’s our fault for actually buying the things on the market.
I’m starting to wonder when they will come down, I hope it’s back around 3% in 2025 when I need to renew
God forbid you grab a deal, the next rise will then be on you! (My wife talked me into a five year fix in 21 when I only wanted to go for two - I’m very grateful to her for that (well, for the time being, god knows what rates will be like in 2026))
Would be nice if house prices fell to match the reduced amount people can borrow now. Feels bad that houses can just get more and more unaffordable with each increase
Meanwhile, media doom clickbait "House prices could fall 35%!!"
Clown shows, the lot of them. If you don't build enough houses house prices do not go down over time.
The main driver is inflation - it's higher than expected, and not falling as fast as expected. So bond yields have gone up as the market expects Interest Rates to go up further to bring down inflation.
The problem for the mortgage lenders is that they themselves borrow money off the market - if they offer a product at 5.5% but their own borrowing rate goes up, they're at risk of losing money if people fix at the low rate. These changes are happening fast at the moment causing the mortgage lenders to be inundated with demand and then discovering their product is no longer even viable.
This will calm down once Inflation starts falling in line with predictions (rather than defying predictions); bond markets will become less volatile and more predictable so mortgage lenders will be able to offer deals for longer without worrying their costs will change by the next day.