As the UK housing market continues to evolve, one question on many prospective buyers’ minds is: Will higher mortgage rates become the norm? Recent developments suggest that the era of low interest rates may be over, with experts predicting that mortgage rates of 4.5% could be the new standard in the UK.
In this post, we’ll break down what this means for homebuyers in Harlow and those looking to remortgage, alongside tips on securing the best mortgage rates in this changing landscape.
The Impact of Rising Mortgage Rates
In August 2023, the Bank of England’s Bank Rate surged to a 16-year high of 5.25%, dramatically increasing the cost of borrowing. While many hoped this was a temporary spike, Charlie Nunn, CEO of Lloyds Banking Group, has hinted that this may signal a shift toward higher interest rates in the coming years. According to Nunn, the market now expects interest rates to stay above 3.5%, with mortgage rates settling in the 3.5% to 4.5% range moving forward.
This forecast suggests that UK homeowners and future buyers will need to adjust to a new reality. The current average rate for a five-year fixed rate mortgage stands at 4.88% (as of 2024), which is significantly higher than the 2.5% rates that many homeowners enjoyed pre-pandemic in 2019.
How Will This Affect Harlow Homebuyers?
For Harlow residents or those considering buying a home in the area, understanding the current mortgage landscape is essential. The increased rates will likely:
- Impact affordability: Higher mortgage rates mean higher monthly repayments, which could make buying a home more challenging for some.
- Shift buyer priorities: More buyers may look for properties in a lower price bracket or consider longer-term fixed-rate deals to lock in their rates.
- Encourage remortgaging: Homeowners looking to remortgage may find themselves facing higher interest rates on their current property value, leading them to consider alternative mortgage solutions.
Mortgage Rate Forecast for 2025: What Can Homebuyers Expect?
Looking ahead to 2025, the housing market is expected to stabilise, but higher mortgage rates are likely to remain the norm. As experts predict that rates will settle between 3.5% and 4.5%, it’s important for potential homebuyers and homeowners to plan ahead.
If you’re planning to buy a home in Harlow or elsewhere in the UK in 2025, here’s what you need to know:
- Rising interest rates: Mortgage rates will likely remain elevated in the short term. However, they may eventually stabilise as inflation continues to be managed.
- Availability of fixed-rate deals: Fixed-rate mortgages will continue to be popular as they allow buyers to secure a set rate for 3, 5, or even 10 years, protecting them from rate increases.
- Longer-term mortgages: Many buyers might opt for longer mortgage terms, such as 30 years or more, to reduce monthly payments in the face of rising rates.
How to Get the Best Mortgage Rates in Harlow
With higher mortgage rates now a reality, it’s more important than ever to secure the best possible mortgage deal. As a trusted mortgage broker in Harlow, we can help you navigate the changing landscape and find competitive rates that match your financial situation.
Here are some ways a mortgage broker in Harlow can help you:
- Access to multiple lenders: We have relationships with a wide range of lenders, meaning we can shop around to find the most competitive mortgage rates available.
- Expert advice: We can help you understand the implications of rising rates, offering expert guidance on fixed-rate and variable-rate mortgages.
- Tailored solutions: We’ll work with you to find the mortgage deal that suits your needs, whether you’re buying your first home, moving up the property ladder, or remortgaging.
- Help with affordability: Our team can guide you on how to improve your financial position to maximise your chances of securing a favourable mortgage deal.
What You Need to Know About Repossession
It’s crucial to remember that failing to keep up with mortgage repayments can lead to serious consequences, including the possibility of repossession. If you’re struggling with rising mortgage rates or worried about your ability to meet repayments, it’s important to seek advice early. Speak with a professional mortgage advisor in Harlow to explore your options and avoid financial difficulties.