Monthly Mortgage Update

The mortgage market continues to experience a noticeable slowdown. This can be attributed to two major factors. First, the increase in stamp duty, set to come into effect at the end of the month, is impacting a significant number of clients. Second, there remains a general lack of confidence in the wider economy, leaving many potential buyers and homeowners hesitant to make bold financial moves.

Despite this economic uncertainty, the Bank of England has decided once again to hold its base rate steady at 4.50%. This consistent rate provides some stability amidst the fluctuating market conditions.

Interestingly, the cost of lenders borrowing money—measured through swap rates—has remained fairly stable as well. Two-year swap money currently sits at 4.06%, while five-year swap money is at 4.02%. These figures highlight a notable shift in the market: the gap between two-year fixed and five-year fixed money has narrowed significantly. At its peak, this spread was as wide as 0.65%, but it now hovers at nearly the same rate.

This compression of rates suggests that longer-term fixes are becoming increasingly attractive to borrowers, as they offer added security without a significant premium compared to shorter-term alternatives. As we navigate these shifts, it’s clear that the mortgage landscape is evolving. Staying informed and prepared will be crucial for anyone looking to make financial decisions in this uncertain climate.