\n<\/p>\n
Mortgage brokers are keen to stress that the moves of recent days are not another cycle of rapidly rising rates, the likes of which were seen in the last two years.<\/p>\n
The graph above shows that mortgage rates are still below last summer’s peak, and not accelerating as alarmingly as they did after the mini-budget of 2022.<\/p>\n
However, some borrowers had banked on rates going down consistently throughout the year.<\/p>\n
Two more key factors have created the current bump in the road. <\/p>\n
Firstly, the global economic outlook has not been as positive as many would have hoped. On Wednesday, the US central bank again said it would keep interest rates unchanged, because the rate of rising prices (inflation) had proved more persistent than expected.<\/p>\n<\/li>\n
Secondly, lenders tend to move in a pack. A mortgage provider wants to set its rates to be competitive, but not too low to be suddenly inundated with custom and unable to cope with the demand.<\/p>\n<\/li>\n<\/ul>\n<\/div>\n
The reality for home buyers and owners in pounds and pence is that, compared to someone getting a mortgage a year ago, it is a little more expensive.<\/p>\n
Property portal Rightmove estimates that the average mortgage payment on a typical first-time buyer type property when taking out an average five-year fixed, 85% loan-to-value mortgage, is now \u00a31,117 a month, up from \u00a31,056 a year ago.<\/p>\n
However, for those remortgaging as a two-year, or particularly a five-year, current deal expires, the monthly cost could be hundreds of pounds higher because the rate could have even been below 2% when they got their last deal.<\/p>\n<\/div>\n