At the beginning of this month several lenders, including Halifax, HSBC and Leeds Building Society, trimmed their fixed-rate mortgages as they were keen to build a new pipeline of business for the year. However, shorter-term Swap rates have been edging upwards since mid-December as forecasts suggest that there might not be as many reductions in base rate this year as previously thought. This rising cost of borrowing has meant other lenders, who are less able to absorb the increase in Swaps, have raised their mortgage rates.
SONIA swaps
As of 10 January
09 Jan 2025 10 Dec 2024 10 Jan 2024 1 Year 4.399% 4.302% 4.794% 2 Year 4.278% 4.069% 4.216% 3 Year 4.218% 3.942% 3.902% 5 Year 4.147% 3.810% 3.615%
Source: Chatham Financial
Last week was not a good one for Chancellor Rachel Reeves with Government borrowing costs hitting their highest level since 2008 and the pound falling to a 14-month low against the dollar. However, so far this has not translated into a significant increase in mortgage rates. There are still two- and five-year fixes available from sub-4 per cent for those moving home with a 40 per cent deposit, for example.
Best buy remortgage rates (all at 60% loan-to-value)
Rate Type
4.73% two-year fix
4.93% three-year fix
4.57% five-year fix
Source: Moneyfacts
The Bank of England says it still plans to continue with interest rate reductions this year, although the markets think there will be fewer than previously thought, with perhaps only one, leaving base rate at 4.5 per cent by the end of the year. However, other economists expect multiple reductions in rates, with 51 economists polled by The Times predicting at least four rate cuts this year. In the absence of any definitive insight, all eyes will be on the minutes of the next Monetary Policy Committee (MPC) meeting on 6 February (and subsequent meetings) to see the split in voting. At the last meeting in December, the MPC voted by a majority of six to three to maintain bank rate at 4.75 per cent, with three members preferring a 0.25 percentage point reduction to 4.5 per cent.
Borrowers interested in one of the ‘best buy’ mortgage rates are advised to move quickly to secure it as there is no guarantee they will be around for long. Rates can be booked several months before required so it might be worth reserving a deal now for when you need it; if pricing has come down further by then, you should be able to move onto a cheaper deal.
It is also important to seek advice – AWS Private Finance is a whole-of-market broker who will look for the best mortgage for your circumstances, comparing all the products on the market and advising you if rates fall by the time you come to take out your mortgage. Please get in touch for more information.
