Following last week’s bank of England review, the base rate remains at 5.25% – What does this mean for mortgage borrowers? Another interest rate hold means the 1.3 million or so homeowners on variable-rate deals will not suffer an increase in their monthly repayments, which will be welcome news after months of increases.
For anyone currently on a fixed rate that is not due to end soon will not be affected, although the Bank rate does influence the rates they will be able to get in the future. The average two-year fixed rate is 6.3 per cent, and the average five-year fixed rate is 5.87 per cent. These could start to come down gradually as the Bank rate seems to have hit its peak. Mortgage rates had been at rock bottom for years, but in June they hit their highest level since 2008: the average two-year fix reached 6.94 per cent amid runaway inflation. They have been creeping down since, and the cheapest deals now start with a “4” for the first time since early July. A mini price war between banks has helped — rates are cheaper the longer you fix for because interest rates are expected to be lower in the future.
Focus on: First Time Buyer Study
In a recent HSBC study seven out of ten first-time buyers are confident of getting on the property ladder. Those looking to get the keys to their first home are now more confident about their ability to buy compared to earlier this year, a high street lender bank has found. Research from HSBC revealed that nearly seven out of ten people who are hoping to buy their first home in the next 12 months are now more certain of achieving that goal, compared to findings at the start of the year.
The reasons behind the buying decision were varied, with just over a fifth of first-time buyers saying that it is cheaper than renting, gaining more independence was the next most popular reason to buy with 20 per cent saying this was their primary motivation. Financial security (17 per cent) and providing for their family (14 per cent) were the next two most popular reasons to purchase their own home. One in nine said the main reason for using their first home as an investment.
