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Financial update: Mortgage rates

Philip Hammond’s Budget on Monday included a series of measures to help first-time buyers and boost housebuilding. Whilst these measures are welcome, uncertainty around Brexit means people remain cautious about buying or selling.

When it comes to mortgages, many borrowers have reacted to the political uncertainty by fixing. Around 94% of mortgages issued in August this year were fixed, compared to 59% ten years ago, according to UK Finance data.

The average fixed rate in August was 2.27%, up from 2.09% at the start of the year. This increase is due to the base rate rise to 0.75% in August. But subdued transaction volumes means competition amongst lenders is also on the rise, and is keeping mortgage rates in check. Some lenders are trying to win market share by pricing aggressively. They can no longer be as flexible with lending criteria, so the other tool at their disposal is price.

If you’re looking to apply for a mortgage, you are well placed to take advantage of these circumstances. If you are applying now, you have three to six months to complete on your mortgage application, which means you can agree a rate and hedge against the political uncertainty. In the event of a Brexit deal and a pick-up in property sales, pricing may become less competitive. So now is a good time to review your borrowing options.

If you’d like any help or advice, or want to discuss the financial outlook for the rest of 2018, please get in touch with us.

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Mortgage Advice. The choice of interest rate and product terms will depend on your circumstances and the amount of the mortgage. Before you make a mortgage application, we will carry out a full review to establish your needs and preferences and if you meet the criteria, we will give advice and make a recommendation to you. There may be a fee for mortgage advice. All mortgages are subject to status. Please note that all products show an indicative rate only and may not be suitable for you. You must be 18 or over.

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Knight Frank Finance LLP is a limited liability partnership registered in England and Wales with registered number OC322399. The principal office of Knight Frank Finance LLP is situated at 55 Baker Street, London W1U 8AN. Knight Frank Finance LLP is authorised and regulated by the Financial Conduct Authority under Financial Services Register number 459093.