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Mortgage Rates Hit 7% Amid Strong Job Growth

1/17/2025

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Summary

Mortgage Rates Surge

Mortgage rates have exceeded 7% for the first time since May 2024, averaging 7.04% for 30-year fixed loans.
December saw robust job growth, adding 256,000 jobs, which has impacted rising mortgage rates.
Experts anticipate a gradual decline in mortgage rates over the next five years, stabilizing between 6% and 6.5%.
Future mortgage rates will be significantly influenced by economic factors like inflation and Federal Reserve policies.

Summary

Borrowers Face Uncertainty

UK mortgage rates are increasing, even with a slight inflation drop, as lenders raise fixed product rates.
The Bank of England is likely to keep the base rate at 4.75% in February, with possible cuts later.
Economic uncertainty and rising swap rates may sustain high mortgage costs, affecting borrower affordability.
The average two-year fixed mortgage rate is 5.49%, and five-year rates are 5.27%, with sub-4% rates unlikely soon.
Borrowers should act quickly to secure deals, as lenders may withdraw offers amid market volatility.

History

Historical Context

Rising mortgage rates above 7% echo the historical patterns of post-recession recovery. Following the 2008 financial crisis, low rates fueled housing demand, leading to eventual inflation. Current economic policies reflect lessons learned from past monetary strategies, emphasizing the delicate balance between growth, inflation, and interest rates.

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Mortgage Rates Surge

Mortgage rates have exceeded 7% for the first time since May 2024, averaging 7.04% for 30-year fixed loans.
December saw robust job growth, adding 256,000 jobs, which has impacted rising mortgage rates.
Experts anticipate a gradual decline in mortgage rates over the next five years, stabilizing between 6% and 6.5%.
Future mortgage rates will be significantly influenced by economic factors like inflation and Federal Reserve policies.

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