The housing market is recovering rapidly from the volatile conditions of late 2022, when mortgage rates spiked in the wake of the mini budget.

UK house prices rose 0.5% in April following seven consecutive monthly declines, according to Nationwide. Meanwhile mortgage approvals for house purchase, a good leading indicator for housing market activity, rose 18% in March compared to a month earlier, the Bank of England reported on Thursday.

The pace of the recovery is exerting pressure on the lenders, according to Hina Bhudia, Partner at Knight Frank Finance:

“The mortgage market is recovering steadily as we move through spring, and most indicators suggest that robust levels of activity continue into summer at least.”

"At least three of the largest lenders have notched rates up this week and there are now only a handful of sub-4% five year fixed mortgages left on the market. It’s hard to say whether this constitutes the beginning of a trend of rising rates or is simply the lenders trying to manage service levels by avoiding being the cheapest on the high street. Activity is rising quite quickly and borrowers are extremely sensitive to interest rates at the moment, so the cheapest lender on the high street tends to get swamped.”

“On the other hand, we’re likely to see another rise in the base rate next week and recent economic data suggests that consumers are weathering this period of higher interest rates relatively well. Mortgage rates may have to climb over the medium term to accommodate a higher peak base rate.”

The Bank of England will make its next decision as to whether to raise the base rate on May 11th. A 0.25% move to 4.5% looks highly likely, though there is considerable uncertainty as to whether the Bank will opt to pause at that point.

Mortgage offers can generally be secured six months before the end of your deal, so if you’re concerned about rising mortgage rates, it may make sense for you to lock in a rate today. Most can be renegotiated if conditions change. Get in touch with one of our experts to discuss your options.