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Mortgage rates have recently increased for the first time in several months, signaling a cautious approach from lenders as we head into the winter season. Despite experiencing a series of drops in interest rates, new and renewing borrowers have seen a slight worsening of the picture, according to data from financial information service Moneyfacts. The average rate for a two- or five-year fixed mortgage sits at around 5%, which is still lower compared to previous years but can be a financial strain for many homeowners.
Data from Moneyfacts indicates a marginal increase in mortgage rates over the past month, with a rise of 0.02 percentage points. This brings the average rate for a two-year deal to 4.98% and 5.02% for a five-year mortgage. The majority of mortgage customers opt for fixed-rate deals, where the interest rate remains unchanged until the deal expires, typically after two or five years. This news may disappoint many potential first-time buyers who were hoping for lower mortgage rates to make their home purchase more affordable.
The current mortgage rates in October are significantly lower than those from two years ago, when a two-year deal averaged 6.67%. With rising costs of living, including food prices, many homeowners are now facing the reality of higher monthly repayments. The government has pledged to assist individuals with the cost of living, with Chancellor Rachel Reeves set to deliver the Budget in November. Borrowers are advised to carefully assess their own financial situation and seek guidance as needed to navigate the mortgage market.
Rachel Springall, a representative from Moneyfacts, emphasized the importance of independent advice for borrowers in light of the changing mortgage landscape. As the outlook becomes clearer, it is crucial for individuals not to feel pressured into securing a deal prematurely due to speculation surrounding the Budget. The Institute for Fiscal Studies has cautioned against hasty or incomplete fixes to boost the government’s tax revenue, urging for thoughtful economic measures in the upcoming Budget
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