Something strange is happening in the mortgage market. And it is not good news for home owners and first time buyers. Despite gilt yields subsiding to levels seen before the now notorious mini-Budget on 23 September, fixed mortgage rates have resolutely failed to follow suit.
Sure, they are down from their peaks - but only just. Today’s data from Moneyfacts shows the average two year fixed rate at 6.47%, unchanged from yesterday and only 18 basis points lower than the peak of 6.65% reached on 20 October. But they stood at just 4.74% when former Chancellor Kwasi Kwarteng stood up to announce his ill fated growth plan.
It is the same story in the five year fix market. The average price today was 6.31%, down a single solitary basis point. Little comfort to buyers and again only slightly below the peak of 6.51%, also on 20 October.
Meanwhile the five year gilt yield is today standing at 3.389%, more than 130 basis points less than the 4.699 peak on 27 September and well below the 4.061% of the day of the mini-Budget.
I am only a simple soul and I am probably missing something obvious...but even so.
One possible explanation is that no single lender wants to be the first to slash its rates and invite a flood of applications that it cannot process. There may be something in that but you would still expect rates to steadily drift down as lenders tweaked their deals. Maybe lenders are holding the line the until the Bank of England makes its decision on rates tomorrow and the Chancellor delivers the Autumn Statement later in the month. Perhaps. But borrowers deserve better.