Some fixed mortgage rates typically being offered by lenders have been edging up this week, dealing a blow to borrowers hoping for continued reductions.
Average rates rise
On Thursday morning, the average two-year fixed homeowner mortgage rate on the market was 5.48%, up from 5.47% on Wednesday, financial information website Moneyfacts said. The average five-year fixed homeowner mortgage rate on the market on Thursday morning was 5.50%, up from 5.49% on Wednesday.
On Monday morning this week, the average two-year fixed-rate homeowner mortgage on the market was 5.46% and the average five-year fixed-rate on the market was 5.48%.
Context and expert comment
Mortgage rates jumped earlier this year amid the conflict in the Middle East but in recent weeks lenders have made a string of rate cuts. David Hollingworth, associate director at L&C Mortgages, said: “The story for mortgage rates in recent weeks has generally been positive, as cuts to fixed rates have dragged the market in a positive direction.
“However, any borrower hoping for rate cuts to become an ongoing trend will need to rethink, as a growing number of lenders have announced impending hikes to fixed deals in the coming days.
“The resumption of hostility in the Middle East has caused further uncertainty in financial markets, as the threat of higher interest rates returns.
“That’s affecting lenders’ funding costs and has already resulted in several major lenders announcing that they have increased fixed rates or are about to.
“Several moves in quick succession is usually a signal that others will not be far behind.
“Borrowers that had been holding on in the hope of further reductions improving their rate choice may now need to hurry if they want to avoid missing out on some of the lowest rates.”
Impact on borrowers
The uptick in rates represents a reversal of the recent downward trend, and borrowers who delayed locking in rates may face higher costs. The uncertainty in financial markets, driven by geopolitical tensions, continues to influence lenders' funding costs, potentially leading to further increases.
