Matthew Ryan, head of market strategy at global financial services firm Ebury, expects the central bank to raise interest rates to about 6.35% within the first three months of next year.

UK mortgage rates have hit a 15-year high, putting more pressure on homeowners and slowing the housing market. His two-year fixed-rate average on mortgages has now peaked at 6.66%, up slightly from his 6.63% peak on Monday, July 10, according to Moneyfacts data. The mortgage rate on October 20th last year was 6.65. %. But the new interest rates are the highest UK homeowners have experienced since August 2008 during the global financial crisis, and mortgage costs hit their highest level in nearly two decades.

The UK housing market tried to revive earlier this year

The country’s housing market has been on a roller coaster lately. After a rocky start to the year, the market began to recover in early 2023. But the recovery didn’t last long, as homeowners and buyers recently faced new mortgage pains.

The rise in UK mortgage rates has been driven by several factors, including rising inflation and expectations that the Bank of England (BoE) will continue to raise interest rates to curb inflation. The Bank of England has raised the benchmark rate several times since December, and there are still expectations that the central bank will raise rates further in a bid to curb inflation.

Last month, the Bank of England raised its benchmark interest rate to 5%. The new interest rate was the highest in 13 years. Economists say the base rate could rise to as high as 6% by the end of the year. Rising interest rates have caused mortgage rates to skyrocket, making it more expensive for people to borrow money to buy a home. As a result, house prices began to fall and mortgage approvals fell.

Experts warn UK mortgage holders of more pain

according to reportRising mortgage costs could have a big impact on mortgage holders, experts warn. Danny Hewson, head of financial analysis at investment and equity brokerage firm AJ Bell, said on Tuesday:

“Mortgage payers are heading towards fixed-rate renewal dates with dread.”

She believes the mood in the market has changed and bad news is becoming more common.

Another expert, Matthew Ryan, head of market strategy at global financial services firm Every, expects the central bank to raise interest rates to about 6.35% within the first three months of next year.

“Financial markets are pricing in UK interest rates rising from their current 5% to peak around 6.35% in the first three months of 2024,” he said.

Ryan also warned that the impact could be significant for mortgage holders, as their monthly repayments will increase.

What does this mean for homeowners?

Rising mortgage costs are likely to have a major impact on homeowners. People with variable-rate mortgages will see their repayments increase as interest rates rise. On the other hand, those with fixed-rate mortgages won’t see an immediate increase in fees. However, once the fixed interest rate period ends, you will be locked into a higher interest rate.

Homeowners struggling to make their mortgage payments should contact their lenders for possible solutions. There may be options that can help them, such as deferring payments or refinancing their mortgage.


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Chimamanda U. Martha

Chimamanda is a cryptocurrency enthusiast and an experienced writer focusing on the dynamic world of cryptocurrencies. She entered the industry in her 2019 and has since deepened her interest in the emerging economy. She combines her passion for blockchain her technology with her love for travel and food to bring her fresh and compelling perspective to her own work.

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