I wanted to take a look at where we think interest rates will go. I have even gone on record with some predictions but what do I know? Last year I tied in to a 2 year fixed rate on my mortgage. I would have done a 5 year fix if I had expected rates to increase so do not rely on this to make any decisions.
First a quick look back
When I first became a Mortgage broker in 2012 it was not uncommon to see high street lenders with rates or around 4-5%.
This is where I start to sound like my parents and grandparents… When I bought my first home (in 2013) I had a 15% deposit and manager to get a rate of 3.5%. 2 years later I remortgaged to a rate of 3%. Since then interest rates have just been dropping and then with Covid they dropped even further.
Mortgage Rates in early 2022
As you have probably been seeing in the news, interest rates are beginning to creep up. The problem here however is that by the time you hear about it in the news you have probably missed the boat. Over the last week or 2 we have been seeing lenders increasing rates. I could be wrong but that leads me to believe that in March or April there is likely to be another rate rise. It is in black and white now so I can not back track.
Mortgage rates in mid to late 2022
Thats the question isnt it? We are in a very difficult place. There is a lot going on, the end of covid, war in Ukraine, problems with Evergrande in China, cost of living increases etc etc. I do not think there has ever been a time like this which makes it quite difficult to predict. But lets give it a try…
My personal view is that there will be 2 more rate rises in 2022. One in March or April and then one later in the year, maybe August time.
Interest rates and Mortgages
Interest rate rises do not necessarily mean an increase in mortgage rates but with interest rates on mortgage so low, we are looking at rates starting at around 1.5% for most, there is not a great margin for lenders to eat into. That therefore probably means to some degree there will be increase in mortgage rates throughout 2022.
The good news
Interest rates on mortgages increasing is obviously not good news and although it is difficult to try and put a positive spin on things, mortgage rates are still around 1-2% lower than they were in 2013-14.
Hopefully that will mean when rates do increase it does not prevent people from buying. It may even help to level off property prices which should also help first time buyers.