Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.
Mortgage Rates Have Tripled Since Brexit Referendum, Says L&C
Mortgage rates in the UK have more than tripled since the Brexit referendum, according to research from L&C Mortgages. The findings highlight a significant shift in interest rates over the past ten years, affecting both remortgage and home purchase borrowers.
L&C Mortgages tracked the lowest rates from the top ten UK lenders and found that the average two-year remortgage rate for those with a 40% deposit has risen from 1.52% in 2016 to 4.61% today. The average five-year remortgage rate has also increased, now standing at 4.66%, up from 2.2% in 2016.
For homebuyers, the average two-year purchase rate for those with a 10% deposit has nearly doubled, rising from 2.48% in June 2016 to 4.93% today. Five-year purchase rates have also increased from 3.29% to 4.84% over the same period.
L&C Mortgages calculated that a £200,000 25-year repayment mortgage now costs £322 more per month than it did in 2016, amounting to almost £3,870 more each year.
The report notes that mortgage rates have risen significantly in recent years due to a range of factors, including the pandemic, inflation, market volatility, and increased funding costs for lenders. The Bank of England base rate currently sits at 3.75%, compared to 0.50% at the time of the Brexit vote in 2016, and it dipped further to 0.25% in the months following the referendum.
L&C Mortgages associate director David Hollingworth commented on the dramatic shift in the rate environment and the challenges faced by borrowers who had become accustomed to ultra-low interest rates. He also noted that political uncertainty continues to be a factor in the mortgage market.
These changes are particularly relevant for letting agents and inventory clerks, as higher mortgage costs may impact landlords, tenants, and the wider UK property market.
Source: Mortgage Strategy