“However, a material improvement in mortgage affordability requires the prospect of a cut in interest rates coming on to the horizon. That still looks some way off, suggesting buyers’ budgets are going to remain constrained and that there is a little way to go before house prices bottom out.”
The pause follows 14 rises in a row, taking the bottom charge from 0.1% to five.25%.
Earlier this week, shopper group Which? highlighted considerations round those that are as a result of come off fixed-rate offers round Christmas, a time when funds are sometimes squeezed.
Average two-year fixed-rate mortgages are at the moment above 6%, in keeping with information from monetary info web site Moneyfacts.
But Which? stated that a few of those that had beforehand fastened their deal in December 2021 may have gotten a charge under 2%.
Sam Richardson, deputy editor of Which? Money , stated: “This latest decision may offer some relief for those around the country struggling with housing costs.
“However, Which? warned this week that around half a million homeowners are set to come off their fixed-term deals over the Christmas period, meaning households already under pressure due to the cost-of-living crisis could see their monthly repayments increase by hundreds of pounds.
“Those concerned about how they will repay their mortgage should contact their lender straight away – and doing so will not affect your credit score.
This hold, after many months of rises, will bring some welcome reassurance
“Options may include extending the term of your mortgage, only paying the interest on your deal or taking a temporary payment holiday – and the most suitable will depend on individual circumstances. That’s why it’s crucial that lenders are available to help customers with appropriate and tailored support.”
People ought to keep in mind that extending the mortgage time period or going interest-only for a interval could imply that they find yourself paying extra money to their lender in curiosity fees over the long term.
Property professionals stated the bottom charge pause may convey some “welcome reassurance” to the housing market.
Jeremy Leaf, a north London property agent, stated of Thursday’s charge pause: “Stability is so important to the property market and brings confidence to buyers and sellers sitting on the fence finding it difficult to budget before deciding to make their moves. This hold, after many months of rises, will bring some welcome reassurance.”
Riz Malik, director of Southend-on-Sea -based mortgage dealer R3 Mortgages, stated: “The markets should react positively, and we might witness even larger reductions in fixed rates.”
Gary Boakes, director of Salisbury -based mortgage dealer Verve Financial, stated: “We can finally breathe a sigh of relief after 14 straight base rate rises. This is truly fantastic news.”
Andrew Montlake, managing director of the UK-wide mortgage dealer Coreco, stated: “It now looks like we are at the very top of the interest rate cycle, with swap rates (which underpin mortgage pricing) continuing to ease and giving lenders more space to engage in a rate war as they battle for market share and look to get a good start to 2024.
“As this competition increases, we will see more products available starting with a four rather than a five and this will inevitably start to encourage more buyers back into the market as they seek to take advantage of the buyers’ market whilst it lasts.”
Renters are additionally feeling the impacts of lease hikes, as greater mortgage charges feed via to them from landlords’ further prices.
According to Office for National Statistics (ONS) figures launched on Wednesday, non-public rental costs paid by tenants within the UK rose by 5.5% within the 12 months to August 2023, accelerating from 5.3% within the yr to July 2023.
This was the largest annual share change because the UK-wide information began in January 2016.
Meanwhile, savers have been benefiting from jumps in money financial savings charges as the bottom charge has elevated.
The perfect (financial savings) offers will not be round for for much longer
Some suppliers have lately reported seeing important rises in savers fixing into offers.
Ed Monk, affiliate director for private investing at Fidelity International, stated: “We know that more and more of our investing clients have been turning to cash as rates have risen, with money market and cash funds jumping to the top of Fidelity Personal Investing’s best-sellers lists this year.
“A pause in rate rises is further evidence that rates may have topped out and investors should understand the risks when they take shelter in cash. Rates on deposit accounts remain below inflation meaning a loss in real terms, while investors in cash may also be missing out on bigger – although less certain – gains from shares.”
Sarah Coles, head of non-public finance at Hargreaves Lansdown , stated of money financial savings charges: “The very best deals may not be around for much longer. If you haven’t switched your easy access rate for some time, it’s also worth making a move while there are some really attractive rates on the market.
“However, this isn’t time to panic. If your current fixed-rate deal doesn’t come to an end for a while, don’t lose faith.
“The Bank of England’s insistence that the fight against inflation is ongoing means we could see more rises further down the line, and at the very least is likely to mean it keeps interest rates higher for a considerable period.
“It means that while we may see some of the most competitive rates retreat, we’re not expecting dramatic drops in the immediate future.”
