Private Finance Market Update

Following the positive news yesterday, with inflation holding steady at 4%, I thought I would send you a quick email with the thoughts/predictions on how this will impact the mortgage market from the firm Private Finance who are one of the providers of mortgage advice for my clients. Please see a summary on the inflation news and mortgage rates below;

Inflation Holds Steady at 4% - Impacts on the Mortgage Market

The unexpected stabilisation of the Consumer Prices Index (CPI) inflation at 4% in January provides a reassuring moment for the mortgage market, which had been bracing for slight increases predicted by experts, ranging from 0.1% to 0.3%.

  • The trend of falling mortgage rates appeared to have taken a break recently off the back of climbing SONIA swaps over the last month. Yesterday’s inflation data alleviates pressure on SONIA swaps, potentially halting further rate rises back into the market. While this data may not trigger immediate rate reductions, the     newfound stability creates more favourable conditions for market transactions, instilling confidence among individuals in the mortgage market.
  • It is likely current mortgage rates are close to the lowest level we will see for the time being given recent activity in SONIA swaps, possibly until we see the first base rate cut in 2024. More individuals appear to be finding fixed rate products more attractive than variable rate products, given the relatively larger discounts introduced recently. The first base rate cut in 2024 could spur large demand back into mortgage enquiries and the purchase market later in the year.
  • Yesterday's data may nudge the Bank of England (BoE) towards considering an earlier base rate cut in 2024, although it is unlikely this alone is sufficient. The recent slowdown in the UK job market, highlighted by data from KPMG and the REC, presented a glimmer of hope for such a cut, signalling alleviating inflationary pressures. While yesterday's inflation figures support this view, the BoE is likely to wait for inflation to be closer to its 2% target before implementing any interest rate adjustments.

Best mortgage buys for the week

Over the last week, there were minor increases in the best 2- and 5-year fixed rate ranging between 0.03% and 0.04% in the residential market. There were larger rises in the best buy-to-let rates between 0.14% and 0.78%.

To get an accurate picture of what is possible in your specific circumstances, please contact us and we will be more than happy to assist you.

This is a sample of purchase and re mortgage products available on February 13th, 2024. There are several factors, in addition to the interest rate, which affect the cost of borrowing ,such as arrangement fees, early repayment charged and other set-up costs. When compiling this selection, we have taken these factors into consideration. Examples are based on a property price of £1,000,000 and each product’s respective maximum price loan-to-value, or a loan of £500,000. Your home may be repossessed if you do not keep up repayments on your mortgage. Please note the FCA (Financial Conduct Authority) does not regulate some forms of buy-to-let. Additional charges on product and total costs of credit are subject to loan to value and individual borrowing ability.

Kindly be aware that the advice contained within this document originates from Private Finance who is authorised to provide regulated advice. This document is based on information available on the date of issue.