Figures suggest that the UK mortgage market is experiencing a period of adjustment, with the average rate on two-year fixed deals rising above 5%. While this may sound significant, rates are only back to levels last seen in August, showing how recent these changes are rather than reflecting long-term highs. According to financial information service Moneyfacts, five-year mortgages are also at their highest point since June, indicating a short-term shift in pricing.
Nearly 500 mortgage products have been pulled from the market in the past week – the highest number since the aftermath of the mini-Budget under Liz Truss – but this is often a sign of lenders repositioning and preparing to relaunch more competitive deals. For buyers, this kind of market movement can create real opportunity, as reduced competition and more motivated sellers can open the door to better purchase prices, making now a smart time to consider buying.
This reduction in mortgage deals highlights how quickly lenders are reacting to shifts in the UK housing market and wider global uncertainty. The yield on two-year government bonds – which indicates how much it would cost to borrow money for two years – has been volatile, further influencing mortgage interest rates across the UK. Adam French, head of consumer finance at Moneyfacts, said, “It’s unwelcome news for borrowers, as the prospect of falling mortgage rates has quickly given way to rate rises,” adding: “How far they could go is now heavily dependent on how global markets and inflation expectations evolve as conflict in the Middle East unfolds.” Lenders are raising mortgage rates in response to shifting forecasts for the future direction of the Bank of England’s benchmark rate, which dictates borrowing costs and affects mortgage affordability. However, for existing borrowers, the interest rate on a fixed mortgage remains the same until the deal expires. For new deals, the latest data shows the average rate on a two-year fixed deal stood at 5.01%, up from 4.84%. The average rate on a five-year fixed deal has risen from 4.96% to 5.09%, reinforcing the current trend of rising fixed-rate mortgages.
According to Moneyfacts, last week 472 residential mortgage products were withdrawn from the market, amounting to about 6.5% of the market, but that still leaves 7,164 deals to choose from. This means there are still plenty of options available for those actively searching for the best mortgage deals in the UK. The biggest single-day fall in residential mortgages recorded by Moneyfacts was the withdrawal of 935 products on 27 September 2022, after Truss and her chancellor, Kwasi Kwarteng, announced £45bn in unfunded tax cuts. At that time, more than 25% of available mortgage deals were pulled, yet, in the longer term, the market proved resilient, demonstrating the strength and adaptability of the UK property sector.
🔗 https://moneyfactscompare.co.uk
This latest upheaval will undoubtedly see several buyers sit on their hands as they play wait and see, whereas the astute move is most likely to purchase now, allowing any extra short term borrowing costs to be offset through the purchase price.
In a rising mortgage rate environment, timing the market perfectly is extremely difficult. Those who focus on long-term value rather than short-term rate fluctuations may ultimately benefit. For buyers who are financially prepared and able to act decisively, the current UK property market conditions could offer a unique window of opportunity.
If you’re considering your next move in an uncertain market, now is the time to act with confidence. As experienced property auctioneers, we help buyers secure great opportunities. Whether you’re a first-time buyer, investor, or developer, our team is here to guide you every step of the way. Get in touch with us today to discover upcoming auction properties, receive expert advice, and put yourself in the strongest position to make a smart purchase.
📞 01280 818 907
📧 auctions@robinsonandhall.co.uk
