Article Summary

Mortgage lending fell by over a fifth in December 2022, as mortgage rates in the United Kingdom have continued to drop following the spike late last year. The effects of Kwasi Kwarteng’s Autumn statement have begun to wear off as the UK’s economy begins to stabilise once again, meaning that the worries of many potential property investors are slowly alleviating.

Now, in February 2023, the UK economy is starting to grow once again as it looks like it is becoming more enticing for property investors to get back into the market.

How much are Mortgage rates now?

Mortgage rates rose sharply at the end of last year, peaking in November, though we wrote about why this was not the worst thing for the property market, and that investors should see it as an opportunity.

The prices have started to drop significantly, with one of many lenders being Virgin Money. They have reduced one of its five-year deals to 4.17% and cut a 10-year deal to 3.99%, with Lloyds Bank also dropping their 10-year deals below 4%. According to analyst Moneyfacts, the average two-year fixed rate has dropped from 6.65% in November to below 5% today.

Mortgage rates are predicted to continue falling, as they are set to be slashed by £1,700 as a price battle has ensued between lenders for the business of customers. For example, an average borrower with a £150,000 loan who postponed locking in a rate will have saved almost £150 in monthly interest – an annual saving of £1,788.

Five-year fixed-rate mortgages are available at below 4% once again as signs the market is starting to settle down following the chaos sparked by the disastrous mini-Budget last autumn. The lenders who offer a rate below 4% are none other than HSBC UK, as they have reduced a five-year fixed-rate mortgage deal for borrowers with a 40 per cent deposit to 3.99%.

What does this mean for the property market?

The property market has seen a lot of investors who distanced themselves at the end of 2022 make their return to the market, seeing their opportunity to invest in property before it attracts more attention as the uk mortgage rates change and drop further.  

Less experienced investors may feel discouraged from going back into the market so soon, but trends are showing that the mortgage rates are set to continue dropping. Several brokers and solicitors across the country are predicting this, such as Adrian Anderson of broker Anderson Harris. He has said that falling rates would boost buyer confidence:

“I think we will see sub-4% fixed rates in the coming weeks as banks jostle for mortgage business…the mortgage market has been a very strange place for borrowers with fixed rates falling over the past three months, while the Bank Rate has increased.”

Additionally, Gary Boakes, director of mortgage broker Verve Financial stated that:

“Two-year fixed rates are now hot again and the appeal of tracker products is disappearing quickly…despite the chaos caused by Liz Truss’s mini-Budget, we have since had months of positive news of rates reducing, which has culminated in a busy January.”

At NPG, we had a recording breaking sales month in January 2023, besting figures managed in our previous best month, October 2022. In what was thought to be the peak of the fall of the UK economy, we managed to record company-record numbers. Breaking those records in January highlights the opportunities that the property market is presenting, and that investors who are choosing to invest in property are already seeing the benefits.

NPG’s enquiries increased by 20%, which helped to result in the company’s outstanding performance. The increase in enquiries highlights the increase in interest from customers despite all the unrest among investors during the back end of last year.

The long-term outlook

The UK economy is in recovery mode, with certain schemes in place such as the government energy rebate, which was put in place to combat the cost of living crisis, stopping in April this year. Mortgage rates beginning to drop looks to be the start of the transition back to normality.

Despite the slight wobble that people may have thought that the property market had last year, the beginning of 2023 looks to be the perfect opportunity for investors to get back in the game. These first few months presents a chance to secure the properties you would want before more people become aware of the outstanding investment opportunities available.

Would you like to find out more about mortgage rates and the state of the market? Click here to schedule an appointment to speak to a recommended mortgage broker.

To learn about the property investment opportunities above, or to find out more about how property investment works, get in touch with the experts at North Property Group today.