Mortgage costs for those with a deposit of at least 40% reached an all time low in May. The path of interest rates is likely to be upwards from here, according to Simon Gammon of Knight Frank Finance.

UK borrowers have had it good for a long time.

The Bank of England (BoE) base rate dropped below 2% for the first time during the global financial crisis in 2008, and rates have been ultra-low ever since. That 2008 rate cut heralded an era of unprecedented buoyancy in the housing market and house prices have climbed 34% during the subsequent 13 years.

The base rate now stands at 0.1% and mortgage rates have dropped further in recent months amid the brightening economic outlook. In May, the latest month for which data is available, average rates at 60% LTV on a two year fixed basis dropped to 1.20%, according to the BoE. That’s the lowest they’ve ever been.

The path of interest rates is likely to be upwards from here, according to Simon Gammon, Managing Partner of Knight Frank Finance:

“Mortgage rates at 1.2% almost certainly represent what will be the cheapest point of this cycle. Borrowers have never had it so good and ultra-low mortgage rates are a significant reason why house prices are climbing at their fastest pace since 2014."

"However, with the economy roaring back to life and inflation picking up, we're already seeing some big lenders notch up the price of their products in anticipation that interest rates will begin to rise. This will be a gradual process, but the path for mortgage costs will be upwards from this point."

Mortgage lenders are competing for market share as the economy recovers by introducing attractive new products to lure customers. Knight Frank Finance deals with the whole of the market, enabling our brokers to find you the best offers available. If you’d like to secure a better rate, please get in touch.