By Mark Dickety on



The mortgage market in context of the UK economy

The period of uncertainty following the shock of the mini-budget is easing, and confidence in the housing market is increasing. Inflation remains stubbornly high and the current Bank Rate is 4.25%, its highest level since 2008. Despite this, mortgage rates are continuing to fall, with the average cost of a five-year fixed-rate mortgage falling by 0.23% since October, in spite of the Bank Rate increasing by 2% during the same period (Zoopla).

Albeit still negative, UK consumer confidence increased 6 points in April, the third consecutive month that confidence overall has improved (GfK), with buyers increasingly accepting they are in a new lending landscape. Sales activity has been solid, supported by a strong jobs market, savings accumulated during the pandemic and strong levels of housing equity. Lenders seem increasingly confident in the market, with far more high loan-to-value mortgages available, and lender competition strongest in loan-to-value ranges of 85% and 90%, popular with first-time buyers (Rightmove). The next two years will be a critical period. However, the general consensus is that rates will drop further, supported by good swap rates.

Driven by record rents, first-time buyers (FTBs) are highly active in the housing market, with smaller properties (up to two bedrooms) in high demand. FTB property prices reached an all-time high of £224,963 in April (Rightmove). Those who can clear the mortgage and deposit obstacles can capitalise on the lower mortgage rates in recent weeks, with lenders being willing to lend at higher loan-to-values. The average FTB mortgage rate for a 5-year fixed, 15% deposit mortgage has now fallen to 4.46%, with the lowest rate for this type of mortgage currently at 4.19% (Rightmove). Fierce competition between lenders means an increasing number and variety of deals are emerging, indicating more confidence in the future market. At the start of April there were 5,146 residential mortgage deals on the market, an increase from 4,372 at the start of last month, and approaching the 5,300 in December 2021, before interest rates began to increase (Moneyfacts). Lenders are more flexible than in recent times, with products in affordable markets (such as shared ownership) and green products booming.

An estimated 1.7 million mortgage deals will end this year, over half of those at rates below 2% (UK Finance), forcing home owners into a new lending landscape. More two-year deals than normal will be ending this summer, prompted by the surge of home buying at the conclusion of the stamp duty holiday in September 2021. Those who can afford it, particularly in London and the South East, are increasingly reducing their mortgage balances through overpayments to cut debt before higher rates take effect. Over £4.1 billion was overpaid in January and February, 21% more than the same period last year (Bank of England). However, Financial Conduct Authority (FCA) data shows that a high proportion of mortgages (around 90%) that will be exposed to interest rate rises before the end of June 2024 are not expected to become financially stretched.

Disclaimer: Data correct at time of writing. The above is for information only. Independent regulated financial advice should always be sought when considering mortgage matters.

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Mark Dickety
Mark is an experienced Mortgage and Protection Adviser who has been providing mortgage advice since 2010. He thrives on finding the right solution for each of his clients' requirements ensuring they have the best experience possible.
Back to blog

My request to renew my existing mortgage with Mortgage Decisions was superbly handled by David who is a most knowledgeable person. I was impressed with his professionalism and his attention to detail. The end to end process was explained throughout by David in particular the various options available to me. This is the second time that Mortgage Decisions have assisted with my mortgage and I wouldn’t hesitate in asking them again in the future.

  • 5 star review on TrustPilotBarney

Jack and Russell were absolutely amazing and helped me secure my first mortgage with no problems at all. As a first time and solo buyer it is all very daunting but they explained everything to me and I could trust that I was in good hands regarding the securing of my mortgage offer. Their communication was brilliant as I usually had a response to any questions within a day and my mortgage offer came through so fast. Thank you!

  • 5 star review on TrustPilotChelsea W

This is my first experience with getting a mortgage, but Rob explained everything clearly, answering all my questions, and helped me get the best mortgage for me. Louis also helped by keeping me updated with the progress of the application and chasing the lender on my behalf. Overall, a positive experience.

  • 5 star review on TrustPilotMegan

I was highly impressed with the mortgage services provided. My needs were somewhat complex (some mortgage brokers refused to help me at all), but they managed to find me the best deal.

  • 5 star review on TrustPilotFee M

The best mortgage advisors in our opinion. I was kept up in the loop from day one. Extremely friendly and professional service. Thank you once again.

  • 5 star review on TrustPilotPawel W