UK Mortgage Rates Drop: The latest information from the Bank of England suggests that the problems caused by high interest rates might be getting better.
In December, the number of new mortgages that were approved reached a level that hasn’t been seen in seven months, according to the Bank’s money and credit data.
Additionally, the average interest rate for new mortgages has gone down for the first time since November 2021. It decreased by 0.06 percentage points to 5.28%.
However, there was a decrease of £830 million in the total amount of mortgage loans given out, which was much lower than the expected increase of £250 million, according to economists surveyed by Reuters.
This drop in mortgage lending occurred because people were not buying houses as much. This was because the Bank had increased interest rates 14 times in a row, making mortgages more costly and slowing down the housing market.
This meant that houses were becoming more affordable.
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The Bank of England kept raising the interest rate, and it reached 5.25% in August. This was the highest rate since 2008, and it has stayed the same in the following interest rate decisions by the regulator.
The data from Tuesday also showed that more people were choosing to remortgage their homes, with 30,800 people doing so in December compared to 25,700 in November.
This trend of more mortgage approvals may continue because the average mortgage rates for a five-year fixed deal have decreased to 5.18%, and for a two-year fixed product, it’s 5.56%, according to the financial information company Moneyfacts.
Some banks on the high street, including the UK’s largest building society, have also reduced their mortgage rates this month.
On Thursday, the Bank’s rate-setting committee will publish its latest predictions for inflation and economic growth, along with its plans for future interest rate decisions.