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Lenders go easier with rate rises this week but more hikes expected – Rightmove

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  • 13/06/2023
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Lenders go easier with rate rises this week but more hikes expected – Rightmove
The increases in average mortgage rates have been smaller this week compared to last week, but market uncertainty may push lenders to make more upward changes, a property search firm has predicted.

The Rightmove weekly mortgage tracker showed that the average rate for a two-year fixed mortgage at 60 per cent loan to value (LTV) jumped by 0.26 per cent to 5.33 per cent this week, while the average five-year fix at the same tier increased by 0.22 per cent to 4.9 per cent. 

This was less than the 0.34 per cent and 0.3 per cent average increases made this time last week for the respective mortgages. 

At 75 per cent LTV, the average two-year fixed rate rose by 0.22 per cent to 5.46 per cent since last week, while the five-year fix went up by 0.17 per cent to 5.05 per cent. Across average rates at 85 per cent LTV, the two-year fix rose by 0.22 per cent to 5.61 per cent and the five-year fix went up by 0.18 per cent to 5.61 per cent. 

At 90 per cent LTV, the average two-year fixed rate came to 5.75 per cent this week, which was 0.24 per cent higher than last week. The average five-year fixed rate rose by 0.17 per cent to 5.39 per cent. 

For those with smaller deposits in need of a 95 per cent LTV mortgage, the average two-year fixed rate came to 6.22 per cent, which is a 0.21 per cent jump on last week. The average five-year fixed rate at the same tier was 5.64 per cent, a 0.14 per cent rise. 

 

Rate movements hang on inflation and BoE 

Matt Smith, mortgage expert at Rightmove, said: “As expected we’ve seen another significant increase in average rates across all LTV ranges.  

“The jump in average rates is actually smaller than last week, however, lender behaviour and the uncertainty surrounding the market at the moment suggests they will increase again, the extent of which hangs on the outcome of the upcoming inflation figures and the Bank of England’s announcement on 22 June.” 

He added: “Looking forward, while we expect lenders to increase rates again it’s clear that they are grappling with the pressure to both remain competitive, but also not be an outlier. For those looking to take out a mortgage right now, it is likely to feel very frantic to secure the best rate possible quickly, and next week’s news has a lot of bearing on whether this period of uncertainty is set to continue for longer, or whether some stability may slowly come back to the market.” 

  

First-time buyer premium 

Those looking to get onto the property ladder are also facing rising costs as rates go up. 

Based on the average asking price of £226,399 for a typical first-time buyer type home, Rightmove said the monthly mortgage payment on a five-year fix at 85 per cent LTV would be £20 more than it was last week at £1,148. 

At 60 per cent LTV, this will be £17 more than it was last week at £786 a month.  

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