Continued on next page... 5 markets and giving buyers increased negotiating room. The rate environment has been the defining issue of this period. Swap rates rose sharply following the outbreak of conflict in the Middle East, which pushed up oil and gas prices and revived concerns about inflation remaining sticky. The average two-year fixed rate climbed from 4.83% on 2 March to a peak of 5.9% by 8 April, its highest level since July 2023. The average five-year fixed rate reached 5.70% in May 2026, compared with just 2.57% in May 2021, illustrating the enduring affordability challenge facing borrowers on maturing deals. Average mortgage rates jumped from approximately 4% at the start of 2026 to 5% by April, with Zoopla noting this as a material contributor to weakened buyer demand. We have seen the major lenders, and smaller and specialist lenders raise fixed rates in response to swap rate movements, effectively ending the competitive rate war seen in the first quarter of the year. Rates have since drifted marginally lower but remain materially above where they stood in January. The Bank of England Monetary Policy Committee voted to hold base rate at 3.75% at its April meeting. While Oxford Economics had been forecasting rates to remain on hold until Q3 2027, the secondary inflationary risks arising from higher energy costs have increased the probability of a summer rate increase, which would place further upward pressure on swap rates and front-book mortgage pricing. As I am sure you will know when you are talking to your clients consumer confidence for many has appeared to weaken during the period. Nationwide noted that household finances remain solid overall, with total household debt relative to income at its lowest point in around two decades, and that savings buffers have been maintained. However, those buffers are unevenly distributed, and affordability pressures are most acute for higher loan-to-value borrowers and first-time buyers. In the rental market, landlord and tenant pressure continues to build. ONS data for the 12 months to April 2026 shows average rents rising 3.5% in England to 1,438 pounds per month, 4.9% in Wales to 834 pounds, and 2.0% in Scotland to 1,019 pounds. These increases reflect continued supply constraints in the private rented sector, exacerbated by the ongoing transition to the new regulatory framework introduced by the Renters' Rights Act 2025.
RkJQdWJsaXNoZXIy MjI4MjU4NQ==