Mortgage rates start to fall!

"Rates on both two and five-year fixed deals have dropped on hopes that the Bank of England may not raise interest rates as much as previously thought.

The rate of inflation slowed to 7.9% in the 12 months to June.

Months of increasing borrowing costs have put pressure on mortgage holders who are forced to renew deals at much higher monthly payment rates.

The average two-year fixed residential mortgage rate dipped to 6.79% on Thursday from 6.81%, according to financial information service Moneyfacts

Meanwhile, the average five-year fixed residential mortgage rate edged down to 6.31% from 6.33%.

The Bank of England has raised interest rates 13 times since December 2021 in an effort to slow soaring price rises, otherwise known as inflation.

Figures on Wednesday showed that inflation had fallen from 8.7% in the year to May to the lowest level in more than a year.

The UK's inflation rate remains almost four times higher than the Bank's official 2% target.

However, the Bank is not expected to raise interest rates - currently at 5% - as steeply as it did during its last meeting when it lifted them by half a percentage point from 4.5%.

Last month, a series of measures were agreed with mortgage lenders aimed at supporting people who are struggling with their repayments.

In June, banks met the Chancellor and agreed there will be a minimum 12-month period before a home is repossessed.

Borrowers will also be able to make a temporary change to their mortgage terms, for example by switching to an interest-only deal, then will be able to return to their original deal within six months without impacting their credit scores."

Source: BBC News, 20/07/23.

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