Mortgage Rates: The Long Wait for Relief

As the mortgage market continues to shift, one thing is clear: the era of sustained falling mortgage rates is still a distant dream. Despite hopes that the Bank of England would make a move on rates in June, it seems that borrowers will have to wait even longer for relief.

The wait for lower mortgage rates continues

Today, NatWest and Santander joined the growing list of lenders to tweak their mortgage rates, and not in favor of borrowers. The increases may not be drastic, but the direction is clear: up. This follows similar moves by Barclays, HSBC, and the Co-op last week, making the sub-4% rates of earlier this year seem like a distant memory.

The lenders’ new pricing reflects the harsh reality of the money markets. The Bank of England’s Monetary Policy Committee (MPC) is still divided, with hawks and doves holding different views on the timing of rate cuts. Governor Andrew Bailey had hinted at possible rate cuts before inflation reaches the 2% target, but his chief economist, Huw Pill, suggests that the first move may still be some way off, even after inflation drops to 2% or below in the April figure.

The Bank of England’s Monetary Policy Committee is still divided on rate cuts

For thousands of homeowners, the delay in rate cuts means they will be stuck with higher mortgage rates for longer. Those who took out mortgages at record low rates five and two years ago are now facing the harsh reality of rates above 5%. The feelgood factor in the housing market, and to some extent the broader economy, will have to wait.

The era of sustained falling mortgage rates will arrive, but we are still a long distance from it yet.

The housing market will have to wait for the feelgood factor to return

In the meantime, borrowers will have to be patient and prepared for further rate hikes. The mortgage market is constantly evolving, and only time will tell when the tide will turn in favor of borrowers.

The wait for lower mortgage rates continues