Mortgage Rates: The Waiting Game Continues

Mortgage rates are unlikely to drop anytime soon, despite NatWest's recent rate cut. Experts warn that lenders are waiting for wage data and the general election before adjusting their rates.

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Mortgage Rates: The Waiting Game Continues

Homeowners hoping for a respite from high mortgage rates may have to wait a little longer. Despite NatWest’s recent decision to cut its mortgage rates, experts warn that other lenders are unlikely to follow suit anytime soon.

Mortgage rates have remained high throughout 2024

The Bank of England’s decision to hold interest rates at 5.25% has led to a stalemate in the mortgage market. With the next round of wage data and the general election on the horizon, lenders are adopting a wait-and-see approach before adjusting their rates.

“No other high street lenders are following the NatWest announcement,” says Nick Mendes of John Charcol brokers. “I expect many lenders are holding out for wage data and the general election before we see competitive pricing amongst the high street lenders.”

The current situation is a far cry from the start of the year, when economists predicted a cut to interest rates. Now, forecasters are divided on whether a rate cut will occur in August or later.

Fixed mortgage prices are generally based upon Swap rates

The impact on homeowners is clear. With average two-year fixed mortgage rates hovering around 5.97% and five-year fixed rates at 5.53%, many are struggling to afford mortgage repayments.

“Affordability is a pressing point for both homeowners looking to refinance and new buyers,” says Rachel Springall, finance expert at Moneyfacts. “Those struggling to see how they can afford mortgage repayments will no doubt be desperate for interest rates to come down.”

As the Bank of England holds interest rates steady, homeowners can only wait and hope for a change in the near future.

The Bank of England held interest rates again on Thursday

“We push back our call for the first MPC rate cut to September, from August previously,” says Pantheon Economics.

For now, it seems that mortgage rates will remain high, leaving homeowners to navigate the complex and ever-changing mortgage landscape.

Mortgage rates will stay high until at least after the general election