Mortgage rates rise despite interest rate cut

Published On Nov 15, 2024, 5:32 PM

Mortgage costs are rising despite a recent cut in interest rates, with the average two-year fixed mortgage rate now at 5.5%. Lenders like Barclays and HSBC have increased rates, affecting borrowers who were hoping for decreasing costs. The cut in the Bank of England's base rate from 5% to 4.75% was expected, but lenders adjusted mortgage costs based on market predictions of rate futures. Approximately 800,000 fixed-rate mortgages below 3% will expire annually until 2027, potentially impacting many first-time home buyers as well.

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The rise in mortgage rates indicates increased borrowing costs for consumers, which may slow down housing market activity and decrease demand for home loans. This could negatively impact real estate-related sectors and companies involved in mortgage lending. Investors should be cautious with investments in financial institutions heavily exposed to housing market fluctuations.

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