Latest UK Mortgage Market Updates: November 2024

Santander Increases Rates

Santander increased its fixed mortgage rates across various products, including residential and buy-to-let mortgages, by up to 0.31%. This adjustment affected new customers and those seeking product transfers. The rate hikes occurred despite the Bank of England's recent base rate reduction from 5% to 4.75%, highlighting a divergence between central bank policy and lender pricing strategies. Other major lenders, such as HSBC and Nationwide, also raised their mortgage rates during this period, contributing to a broader trend of increasing borrowing costs for UK homeowners.

Barclays Announces Mortgage Rate Reductions

Paradoxically, Barclays, which is sometimes seen an anomaly in the Mortgage market is set to cut select mortgage rates by up to 0.20 percentage points starting November 27. This move aligns with stabilising swap markets, which help determine lender borrowing costs. While this adjustment may ease expenses for new borrowers, existing mortgage holders may need to explore other opportunities for savings.

Adjustments to Mortgage Rate Lock-In Periods

Top lenders like NatWest, Halifax, and Nationwide have shortened the lock-in window for fixed-rate mortgages from six to four months. This change helps lenders manage risk during volatile market conditions. Borrowers approaching the end of their terms are advised to act quickly to secure favorable deals.

UK Inflation Climbs to 2.3% in October

Inflation reached 2.3% in October, surpassing the Bank of England's target. Increased domestic energy costs and service sector price hikes are significant contributors. These developments raise the possibility of further interest rate increases, potentially affecting mortgage affordability.

Projections Indicate Elevated Mortgage Rates Until 2029

According to the Office for Budget Responsibility (OBR), mortgage rates are projected to peak at 4.5% in 2027 and remain high until 2029. Borrowers may face extended periods of increased monthly repayments, emphasizing the importance of long-term financial planning for fixed-rate mortgage considerations.

Revised UK House Price Growth Forecasts

Knight Frank has revised its house price growth forecasts due to rising borrowing costs. Predictions now estimate a 2.5% growth in 2025, with an increase to 3.5% by 2027. These forecasts reflect the dampening effect of elevated mortgage rates on the property market.

First-Time Buyer Options Expand

First-time buyers have more choices than ever, with innovative products like £5,000 deposit or no-deposit mortgage options from providers like Skipton and Yorkshire Building Societies. These schemes, offering higher income multiples, aim to make homeownership more accessible despite ongoing economic challenges.

Prime Minister's Comments on Rising Mortgage Rates

Prime Minister Keir Starmer addressed public concerns, attributing mortgage rate hikes to bank policies rather than government actions. The government remains focused on stabilising the economy while addressing affordability concerns. This seems pretty odd since the banks purely react to the macro economic tone, which is set by the government. Banks are now seeing inflation not growth thanks to the Rachel from accounts’ budget.

Conclusion

The UK mortgage market in November 2024 presents both challenges and opportunities for borrowers. From Barclays' rate cuts to expanded first-time buyer options, understanding these developments is key to making informed decisions. Contact Mortgage One today for personalised guidance tailored to your mortgage needs.