Even in the future, higher hurdles for low interest rates on mortgages

The era of ultra-low interest rates for real estate financing seems to be definitively a thing of the past. Charlie Nunn, the CEO of the British Lloyds Bank, expressed skepticism about a return to the near-zero interest rates of the last decade. In his opinion, mortgage rates will decrease but will not fall to the levels seen in the 2010s. The increase in interest rates for fixed-rate mortgage loans is due to the adjustment of interest rate policies aimed at curbing inflation, which has been fueled by the Covid pandemic and the Ukraine conflict. Although there have recently been offers with reduced rates, brokers warn of a possible end to this trend. The average interest rate for a two-year loan is currently 5.36%, while a five-year loan stands at 5.05%. In a BBC interview, Nunn emphasized the challenges that rising financing costs pose for homeowners. About 40% of British properties are mortgage-free. Additionally, an average family with a mortgage earns an income of 75,000 pounds, which helps to cushion many of the rising costs. A decline in payment defaults has been observed since December. For borrowers with variable or renegotiable mortgages, the interest rate increases have immediate effects on monthly payments. First-time buyers also face hurdles, as acceptable terms are harder to find. Approximately 1.6 million borrowers could be affected this year by the expiration of their low-interest contracts. Currently, the interest rate in the UK is stable at 5%, aiming to ensure inflation control. Mr. Nunn is optimistic about the coming year 2024 and speaks of improved financial security for Britons. "For most people, the situation has significantly improved," said Nunn. "We are observing more savings, less credit strain, and a boom in business confidence.