“Rates to rise” – prospects of a cut hit badly by Reeves’ Budget fall-out

“Rates to rise” – prospects of a cut hit badly by Reeves’ Budget fall-out


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It’s the start of a new week after a torrid time for the UK economy and for Sterling last week.

The £ fell to fresh 14-month lows against the dollar, standing at just above $1.22 at one stage, on the back of higher support for the dollar. 

Pundits suggest that financial markets now expect to see just one rate reduction by the Bank of England this year due to stubbornly high inflation and severely struggling growth.

Corporate lobby groups have told the government that higher minimum wage payments, higher National Insurance payments and threshold changes, plus ongoing inflationary worries have hit investment possibilities. 

Rightmove’s expert Matt Smith says: “The short term impact is that mortgage rates are likely to rise, as the cost of borrowing increases impacts lenders. However, this is unlikely to be significant and certainly not completely unexpected. 

“Looking a bit further ahead, the market is still expecting a Bank Rate cut in February, but beyond that is uncertain right now. Despite increased costs, we’re at the start of what is traditionally the busiest period of the year for the housing market, so I expect lenders will still want to take advantage of this demand through as attractive rates as possible.”

Rightmove’s weekly mortgage tracker

TermAverage rateWeekly changeYearly change
2-year fixed5.03%-0.02%-0.13%
5-year fixed4.80%+0.00%-0.05%
TermLowest rateWeekly changeYearly change
2-year fixed4.20%-0.01%+0.10%
5-year fixed4.07%+0.00%+0.13%

Average fixed-term mortgage rates for home-buyers with 5-10% deposits

Loan to Value (LTV)TermAvg rate 03 Jan 2025Avg rate 10 Jan 2025Weekly ChangeYearly Change
95%2-year-fixed5.67%5.63%-0.04%+0.06%
95%5-year-fixed5.29%5.35%+0.06%+0.20%
90%2-year-fixed5.46%5.44%-0.02%-0.04%
90%5-year-fixed5.03%5.02%-0.01%+0.05%

Average fixed-term mortgage rates for home-buyers with 15-25% deposits 

Loan to Value (LTV)TermAvg rate 03 Jan 2025Avg rate 10 Jan 2025Weekly ChangeYearly Change
85%2-year-fixed5.07%5.08%+0.01%-0.19%
85%5-year-fixed4.84%4.83%-0.01%-0.12%
75%2-year-fixed4.80%4.79%-0.01%-0.18%
75%5-year-fixed4.65%4.65%+0.00%-0.14%

Average fixed-term mortgage rates for home-buyers with 40% deposits 

Loan to Value (LTV)TermAvg rate 03 Jan 2025Avg rate 10 Jan 2025Weekly ChangeYearly Change
60%2-year-fixed4.33%4.32%-0.01%-0.15%
60%5-year-fixed4.22%4.22%+0.00%-0.05%

These rates are provided by Podium and are an average based on 95% of the mortgage market. All rates are based on products with a circa £999 fee.

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