What are the current UK mortgage rates? Is 3.5% a good interest rate? And will mortgage rates go down again?
“If I had a penny for every time someone asked me these questions, those pennies would soon turn into pounds,” mortgage adviser Jo Jingree says.
And we get it. Right now, the cost of living is high and a mortgage is one of the biggest financial commitments you can make.
“So it’s easy to understand why, as a nation, we’re keen to secure the most cost-effective rate,” Jo adds. “But as a mortgage adviser with more than 20 years’ experience of navigating the fluctuating market, only one thing is for certain: there’s no crystal ball that can predict when and if rates will go up or down. Therefore, when it comes to answering these FAQs, I much prefer to advise my clients based on fact rather than prediction.”
The obsession around mortgage rates
In the UK, a day rarely goes by without the media discussing mortgage rates.
Mortgage rates refer to the percentage of interest that you’ll pay on top of the money you borrow to buy a property.
And one quick Google of ‘mortgage rates’ brings up headlines like ‘what’s next for mortgage rates?’, ‘will interest rates go down tomorrow?’ and ‘mortgage rates below 5% for the first time since Truss budget’.
So why are we a nation obsessed?
“I think we’ve become fixated on mortgage interest rates because property prices are quite high in relation to income,” Jo says.
According to the latest stats, the average wage is £37,800, while the average UK property price is seven times higher at £269,000.
“In the UK, this can mean it’s customary for first time buyers to buy a ‘starter home’ vs a ‘forever home’,” Jo adds. “Which is why, for many, fixing an interest rate long term doesn’t work for how the UK’s housing market operates. This results in the masses trying to ‘beat’ the system by staying up to date with what the mortgage market is doing.”
Mortgage rates: Is there another way of looking at this?
Here at Mortgage Confidence, we think so.
Mortgage interest rates are subject to change from one day to the next. That’s because they are influenced by a long list of factors. These factors can range from anything like inflation and geopolitical happenings to the Bank of England’s all-important base rate.
“All of which are out of our control,” Jo says. “Therefore, when speaking to clients about what interest rate to lock in and how long to fix for, I always recommend they make their decision based on factors they can be sure of — like their own personal circumstances and their plan for the next five years.”
“It’s a much more holistic way of thinking about things,” Jo explains. “And it can help people feel safe and at peace with their decision, as it’s grounded in reality rather than prediction.”
For example, this might include answering questions like:
- How do you feel about risks? Would you be able to afford to repay your mortgage if it went up each month?
- How do you feel about having financial security? Would you value knowing how much your mortgage will be each month for the next two to five years? Or would you rather have more flexibility?
- If you’re intent on following predictions, how would you feel if that prediction didn’t play out?
- Do you plan on moving in the next two, three or five years?
Mortgage rates: The crux of the matter
At the end of the day all that matters is that you’re comfortable with whatever decision you make.
Whether that’s fixing for a longer period of time or staying on a standard variable rate so you have the flexibility to move, sell, or switch to a new lender or product should a better deal become available.
Multi-award-winning mortgage adviser Jo deals with first time buyers, remortgages and has a wide range of experience in helping those who are self employed onto the property ladder.
She offers a free 30 minute no obligation phone call. So, whether you’re coming to the end of a mortgage deal or are looking to buy your first home, do get in touch.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £399.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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