What are the mortgage rate predictions for 2023?
Since the global financial crash of 2008, we’ve seen interest rates remain at historically low levels. But recently, rates have started to climb again.
The Bank of England’s latest 0.75 per cent interest rate rise (from 2.25 to 3.00 per cent) is the biggest increase since 1989 and the eighth time the BoE has raised rates in under a year. Unfortunately, as most mortgage-dependent homeowners know, a rise in interest rates means that monthly mortgage payments will cost more.
Recently we have seen a raft of mortgage rate changes affecting homeowners and first time buyers. Homeowners paying the average mortgage rate for a typical tracker mortgage have seen their payments go up by £73.50 a month.
So why are interest rates going up, and how high are they expected to go?
What has been happening to interest rates?
Interest rates are a tool that the Bank of England uses to control inflation. Currently, the UK has a target of just 2 per cent inflation, but in October, the cost of living increases pushed inflation to 11.1 per cent. The Bank, therefore, has a fight on its hands to bring this figure down.
Earlier this year, recovery from the pandemic and the ongoing war in Ukraine were already putting pressure on our economy. When Liz Truss launched her tax-cutting ‘mini-budget’ in September, global markets reacted negatively, causing even more economic disruption for the UK.
Fortunately, measures the UK government has taken since to calm those jittery markets – including the Chancellor’s recent autumn budget announcement - seem to be working. Predictions that interest rates would rise to six per cent next year have been revised downwards, and mortgage rate predictions are now lower than initially feared.
Are mortgage rates going up again in 2023?
The Bank of England now predicts that inflation will start to slow from mid 2023, and when inflation falls, the bank will adjust the mortgage rate downwards. The bank predicts inflation should fall to around 5% by the end of the year, and by 2024 it will have fallen to 1.4%.
At Daniel Cobb, we understand that homebuyers are concerned about the rising mortgage rates trend. Getting the right advice on mortgages is essential - especially at times like this. That’s why we have spent the last 20 years building close relationships with a wide range of mortgage advisors. These are professionals whose guidance we value and trust implicitly, and we can put you in touch with one of our trusted advisors today.
There is no catch, we simply believe in giving our clients access to good honest advice. Why not start the ball rolling by getting in touch with our friendly sales team?
