Market experts have predicted that mortgage rates of 4.5% will be the new normal in the UK.
In August 2023, Bank Rate reached a 16-year high of 5.25%, causing the cost of borrowing to increase. Many hoped this was a one-off spike, but the CEO of Lloyds Banking Group has suggested that this might be an indicator of what’s to come for the UK economy. Charlie Nunn commented, “The expectation that markets have is that interest rates won’t get below 3.5% — and that means that the new normal for mortgages will be in that 3.5% and 4.5% range.”
The current average rate for a five-year fixed rate mortgage is 4.88% – significantly higher than pre-pandemic rates of 2.5% in 2019.
Your home may be repossessed if you do not keep up repayments on your mortgage.