Recent increases in mortgage rates have left potential homebuyers and existing homeowners worried. Over the past two weeks, several lenders have raised interest rates on new fixed mortgage deals, making borrowing more expensive.
Here are three reasons behind the upward trend:
- Borrowing Costs: Mortgage rates often anticipate moves by the Bank of England’s benchmark interest rates. As expectations of rate cuts diminish, lenders’ funding costs rise, impacting fixed-rate mortgage deals. The average two-year fixed deal rate has climbed from 5.55% to 5.93%.
- Lender Strategy: Lenders aim to manage their customer base. Recent rate adjustments are not a repeat of rapid increases seen in previous years. However, borrowers like Gary Rees, whose mortgage is up for renewal, are concerned about potential tripled rates.
- Market Dynamics: The mortgage market is influenced by various factors, including economic conditions, investor sentiment, and central bank policies. As borrowers navigate these changes, understanding the reasons behind rate fluctuations is crucial for informed decisions.