The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Personal loan interest rates can range from 6 to 36 percent and are based on various factors. Your interest rate may depend on your credit score, the lender type and other factors based on your financial situation.
Recent data shows Americans have over $241 billion in personal loan debt. Whether you have personal loan debt or are considering taking out a personal loan, this may not always be bad debt. When used responsibly, personal loans can help you get better interest rates by consolidating other debts or help when you need additional funds. When taking out a loan, it’s helpful to know the average personal loan interest rates so you can get the best deal possible.
The interest rate is a fee based on the percentage of the loan amount, so ideally, you want the lowest interest rate possible. We’re going to discuss the average interest rates based on various factors, like your credit score and lender types, to help you find a loan that has the best rates.
Average personal loan interest rates by credit score
One of the best ways to get the lowest interest rates for personal loans is by having a high credit score. There are ways to get a loan with bad credit, but these loans often have some of the highest interest rates. High interest rates mean you may pay hundreds or thousands more in interest fees when you take out a loan. Below is a chart showing the difference between interest rates when taking out a loan based on your credit score:
Credit score
Average loan interest rate
300 – 629
28.50% – 32.00%
630 – 689
17.80% – 19.90%
690 – 719
13.50% – 15.50%
720 – 850
10.73% – 12.50%
Source: Bankrate
Average personal loan interest rates by lender type
You have a variety of options when taking out a personal loan. You can go into traditional brick-and-mortar financial institutions like banks or credit unions and find personal loans online. Some of these lenders may even offer bad credit loans, but remember, these typically come with higher interest rates.
In the following sections, we show interest rates from some of the most popular lenders from each category. As you’ll see, each lender has a range of interest rates, which depends on your credit score, income and other financial information.
Average personal loan rates by bank
Personal loan interest rates from banks can range from 6.99 percent to 24.99 percent. Currently, Santander Bank offers the lowest interest rate range.
Average personal loan rates by credit union
Credit unions are another way to get personal loans, and they’re similar to banks except they’re member cooperatives and not-for-profit. Each of the credit unions listed below has lower interest rates on the higher end of the range, with none being over 20 percent.
Average personal loan rates by online lender
Many people turn to online lenders because not only are they convenient, but they’re also more likely to lend to those with bad credit or those who need a personal loan after a bankruptcy. Depending on your credit score and credit history, some of these personal loans have the highest interest rates.
5 factors that affect your personal loan interest rate
If you’re in the market for a personal loan, it’s helpful to know what lenders are looking for. This helps you get approved for the loan and the best interest rate possible. If you have poor credit, using a cosigner may help with approval, but if you want to get a personal loan without a cosigner, here’s what lenders are looking at:
Credit score and report: Your credit score and report show your credit history and how likely you are to pay back your loan. A low credit score can lead to higher interest rates.
Income: Lenders use your income to determine the loan amount and whether you can pay the amount back.
Debt-to-income ratio: Your debt-to-income ratio is a calculation of how much debt you currently have compared to your income. Ideally, it should be low.
Employment status: Employment shows a steady flow of income. If you’re self-employed or an independent contractor, it may make getting a loandifficult.
Length of loan: Shorter loan terms often come with higher interest rates.
What is a good personal loan interest rate?
What’s considered a “good” personal loan interest rate will depend on the person and their situation. Typically, a good interest rate is anything below the average rate for your credit score. Ideally, you want to improve your credit to get even better interest rates on personal loans.
How your credit score affects your personal loan interest rate
Your credit score and credit history play a big part in getting a good personal loan interest rate. As mentioned earlier, a high interest rate can cost you thousands in additional interest fees. If you have a bad credit score, you may have errors on your credit report that are hurting your credit. Lexington Law Firm offers an in-depth credit assessment that shows you where your credit stands before you apply for a loan. Get your free credit assessment today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Barclays and Santander have announced cuts to their mortgage rates, adding to momentum for cheaper UK home loan deals after HSBC and Halifax reduced rates last week.
Santander led its announcement with a sub-4 per cent deal available to new and existing customers with a deposit of at least 40 per cent on a five-year fixed rate mortgage. It said its residential fixed rates would fall by up to 0.82 percentage points from Wednesday.
Barclays will from Wednesday offer a two-year fix at 4.17 per cent, down from 4.62 per cent, for borrowers with a 40 per cent deposit. Its rates will fall by up to 0.5 percentage points across its residential range, and it will offer those with a smaller 25 per cent deposit a two-year rate of 4.2 per cent, down from 4.7 per cent.
The Co-operative Bank slashed rates on Tuesday by more than one percentage point for some deals. Existing customers looking to remortgage can now access a two-year fix starting from 3.85 per cent, while five-year deals start at 3.74 per cent. For new customers the equivalent rates are 4.22 per cent and 3.84 per cent respectively.
The changes follow rate cuts announced last week by HSBC, Halifax and Leeds Building Society across their residential ranges.
Mortgage rates have been falling for several weeks as competition between lenders intensifies. The latest cuts follow a drop in market swap rates in December, after investors predicted a quickening pace of falls in inflation and Bank of England interest rates over the coming year. Lenders use swap rates to guide their pricing of fixed-rate mortgages.
Adrian Anderson, director at broker Anderson Harris, said: “The market is predicting that the base rate might come down quicker than the Bank of England is suggesting . . . Over the short term, I think we’re going to continue to see a reduction in fixed-term pricing from lenders.”
Two clients called him last week to discuss remortgaging temporarily to a variable rate deal in the expectation they could lock in to a lower fixed rate later. But on seeing the higher rates on variable deals, they demurred.
“A lot of people last year took variable trackers in the hope that fixed rates will start to come down and now they have,” Anderson said. “So I do think we’re at that point where it could be the time to switch from tracker margin to a fixed rate. The fix is so much cheaper than variables.”
Mortgage rates may have fallen in recent weeks, but they remain well above the levels on offer before the “mini” Budget of September 2022. Average two-year fixed rates are currently 5.81 per cent, down from a high of 6.86 per cent last summer, according to finance site Moneyfacts, but were at 4.7 per cent on the eve of the “mini” Budget.
Aaron Strutt, a director at broker Trinity Finance, said one factor behind the rate cuts was the falling cost of funding mortgages for banks and building societies, as indicated by swap rates. “The lenders know the only way to get the markets moving again and to boost some of the low lending figures they had last year is to issue cheaper rates,” he said.
The fall in swap rates since December — with two-year rates running at about 4.2 per cent — has opened up an unusual gap with the Bank of England base rate of 5.25 per cent. This is a sign of the extent to which investors expect base rates to fall over the coming years.
With swap rates so far out of kilter with the base rate, though, some brokers questioned how long swaps would continue to decline — and alongside them, mortgage interest rates. Anderson said: “The Bank of England is potentially not going to start reducing base rates until the spring.”
Chris Sykes, technical director at mortgage broker Private Finance, said a number of lenders had yet to reduce rates, so there were likely to be further cuts, though these were unlikely to be “dramatic”. He added that some rates offered in the latest round of cuts were below the relevant swap rate, a highly unusual position for lenders to be in. “This is very rare, so we don’t expect these rates to be around for long.”
Federal Reserve left its key short-term interest rate unchanged again Wednesday, hinted that rate hikes are likely over and forecast three cuts next year amid falling inflation and a cooling economy.
That’s more rate cuts than many economists expected.
The decision leaves the Fed’s benchmark short-term rate at a 22-year high of 5.25% to 5.5% following a flurry of rate increases aimed at subduing the nation’s sharpest inflation spike in four decades. The central bank has now held its key rate steady for three straight meetings since July.
That provides another reprieve for consumers who have faced higher borrowing costs for credit cards, adjustable-rate mortgages and other loans as a result of the Fed’s moves. Yet Americans, especially seniors, are finally reaping healthy bank savings yields after years of paltry returns.
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Is a soft landing in sight? What the Fed funds rate and mortgage rates are hinting at
Will the Fed raise interest rates again?
The central bank didn’t rule out another rate increase as it downgraded its economic outlook for next year while lowering its inflation forecast. In a statement after a two-day meeting, it repeated that it would assess the economy and financial developments, among other factors, to determine “the extent of any additional (rate hikes) that may be appropriate to return inflation to 2% over time.”
Fed Chair Jerome Powell said at a news conference, noting the Fed’s key rate is “at or near its peak.”
while the Dow Jones Industrial Average closed at a record high after rising 1.4% following the Fed’s signals that it’s probably done lifting rates and is forecasting three cuts next year. The 10-year Treasury was down to about 4% from 4.21% on Tuesday.
Last month, Powell said high Treasury yields, if persistent, likely would constrain the economy and require fewer Fed rate increases,
In its statement Wednesday, however, the central bank didn’t acknowledge the recent decline in Treasury yields, suggesting yields are still relatively high and could spike again, crimping the economy.
“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” the Fed said, repeating the language of its previous statement.
Is inflation really slowing down?
The Fed’s middle-ground approach may have been cemented Tuesday by a mixed report on the consumer price index. The good news was that overall inflation barely budged in November amid falling gasoline prices, pushing down annual price gains to 3.1% from 3.2%, still well above the Fed’s 2% goal.
The Federal Reserve System is the U.S.’s central bank.
When does the Fed meet again?
The first Federal Reserve meeting of the new year will be from Jan. 30 through 31.
Federal reserve calendar
Jan. 30-31
March 19-20
April 30- May 1
June 11-12
July 30-31
Sept. 17-18
Nov. 6-7
Dec. 17-18
The U.S. economy was strong in the third quarter as consumers continued to spend despite high interest rates and inflation.
The value of all services and products generated in the U.S., or GDP, rose at a seasonally adjusted 4.9% for the year in the months spanning July to September, according to the Commerce Department. That was more than twice the 2.1% increase in the previous quarter and the most aggressive pace of growth since the end of 2021 when the economy surged back from a recession sparked by the pandemic.
a recession over the next year, down from the 61% odds forecast in May.
Barclays predicted a loss of roughly 375,000 jobs by the middle of next year. But consumer spending remains robust despite high inflation and interest rates that are making credit card use and consumer loans more expensive. And that may help stave off a recession, says Barclays economist Jonathan Millar.
What does FOMC stand for?
The FOMC is the Federal Open Market Committee, the voting body responsible for setting interest rates. The 12-member committee includes seven members of the Board of Governors and five of the 12 Reserve Bank presidents.
What causes inflation?
Inflation can have many roots. Typically, it’s caused by “a macroeconomic excess of spending over the economy’s relative ability to produce goods and services,” said Josh Bivens, the director of research at the Economic Policy Institute, a left-leaning think tank based in Washington D.C.
That means more people are wanting items and services than there is adequate supply, leading producers to raise prices.
“If everyone in the economy, tomorrow, decided they weren’t going to save any money from their paychecks, and they’re just going to spend every last dollar out of the blue, they would all run to the stores and try to buy things,” Bivens said. “But, producers haven’t produced enough to accommodate that big surge of across-the-board spending. So, you would see prices bid up.”
Inflation can also happen when there are too few producers, or there aren’t enough employees to provide the coveted products and services, Bivens said.
Finally, economies also have some “built-in inflation” to help keep inflation in check. In the U.S., that target is 2%, meaning businesses can raise prices 2% annually year and that shouldn’t overburden consumers. That’s also the typical cost of living raise offered by employers.
Inflation meaning
Inflation is the term for a “generalized rise in prices,” according to Josh Bivens, head of research at the Economic Policy Institute, a left-leaning think tank based in Washington D.C.
Everything from food to rent can become costlier due to inflation. But it is the overall impact that determines what the inflation rate actually is.
“Inflation, though, really is meant to only refer to all goods and services, together, rising in price by some common amount,” Bivens said. The Federal Reserve’s inflation goal is 2%, which means businesses can hike prices by 2% a year and that shouldn’t cause consumers financial distress. Cost of living increases to workers’ pay are also expected to meet that target to ensure consumers can adequately deal with the rising costs of goods and services.
What is CPI?
In November, the Consumer Price Index (CPI) ‒ a measure of the average shift in prices for different products and services ‒ was 3.1%, down slightly from the month before.
Annual inflation is down dramatically from the 9.1% in June 2022 that marked a 40-year high but remains above the 2% target the Fed sees as the level that signals the rate of price increases is under control.
Why is CPI important?
The Federal Reserve watches two key aspects of the economy, price stability and maximum employment, and those are the main factors it takes into account for its interest rate decisions. The CPI is a primary measure the Fed looks at to help determine if prices are “stable.’’
What is the difference between CPI and core CPI?
Core prices don’t count the volatile costs of food and energy items, giving a more accurate window into longer-term trends.
Are wages going up in 2024?
If you’re deemed a top performer at a company that is offering raises, you’ve got a pretty good chance of getting a pay boost next year.
About 3 out of four business leaders told ResumeBuilder.com they intended to give raises. But half of those company executives said only 50% or less of their staff members would see a pay hike, and 82% of the raises would hinge on performance. For those who do manage to get the salary boost, 79% of employers said the pay hikes would be greater than those given in recent years.
Are U.S. Treasury yields rising?
Not recently.
The 10-year Treasury yield was above 5% in November when the Fed kept rates steady for the second consecutive month the first time it had left the key rate unchanged two months in a row in almost two years.
That led to mortgage rates spiking to almost 8% and pushed up other borrowing costs for consumers and businesses. Stocks meanwhile sank close to a recent low, leading Fed Chair Jerome Powell to say such financial pressures could achieve the same cooling effect on the economy as additional rate hikes.
But in the following weeks, 10-year Treasury yields dipped to 4.2% and stocks rebounded. That might make the Fed resist rate cuts in case the economy heats up and causes the broader dip in prices “to stall at an uncomfortably elevated level,” Barclays says.
Barclays and Goldman Sachs forecast that rate cuts won’t happen until the spring, and that there will be only two, to a range of 4.75% to 5%, with more cuts implemented in the next two years.
When will inflation go back to normal?
It may take a little while.
Inflation’s decline likely “won’t show much progress in coming months,” Barclays wrote in a research note.
Overall price hikes have eased significantly since peaking at 9.1% in June 2022, a four-decade high. And in October, broader inflation as well as core prices experienced a dip, leading to a lower 10-year Treasury yield.
But core prices, which exclude the volatile costs of food and energy, will probably rise 0.3% each of the next three months, Goldman Sachs says. Used cars and furniture have been getting cheaper as the supply-chain shortages of the pandemic end. Meanwhile, health care, auto repairs, car insurance and rent continue to get more expensive, as employers pay higher wages to attract workers amid a labor shortage lingering from the global health crisis.
What is core inflation right now?
Core prices, which leave out the more volatile costs of food and energy, bumped up 0.3% in November, slightly more than the 0.2% uptick seen the previous month. That kept the yearly increase at 4%, the lowest rate since September 2021.
New inflation tax brackets
Inflation may also impact the amount of taxes you have to pay.
The Internal Revenue Service said in its annual inflation adjustments report that there will be a 5.4% bump in income thresholds to reach each new level in next year’s tax season.
In 2024, the lowest rate of 10% will apply to individuals with taxable income up to $11,600 and joint filers up to $23,200. The top rate of 37% will apply to individuals earning over $609,350, and married couples filing jointly who make at least $731,200 a year.
The IRS makes these adjustments annually, using a formula based on the consumer price index to account for inflation and stave off “bracket creep,” which happens when inflation shifts taxpayers into a higher bracket though they’re not seeing any real rise in pay or purchasing power.
The 2024/25 increase is less than last year’s 7% increase, but much more than recent years when inflation was below the current 3.1% inflation rate.
Will Social Security get a raise because of inflation?
Yes, but it will be a lot less than what recipients received in 2023.
The cost-of-living adjustment, or COLA, to Social Security benefits will be 3.2% next year. That’s roughly one-third of the 8.7% increase given in 2023, which marked a forty-year high.
The 2024 COLA hike is above the average 2.6% raise recipients have received over the past two decades, but seniors remain concerned about being able to pay their expenses as well as the increasing possibility Social Security benefits will be reduced in coming years, according to a retirement survey of 2,258 people by The Senior Citizens League, a nonprofit seniors group.
How does raising rates lower inflation?
The federal funds rate is what banks pay each other to borrow overnight. If that rate increases, banks usually pass along that extra cost, meaning it becomes more expensive for businesses and consumers to borrow as rates rise on credit cards, adjustable rate mortgages and other loans. That’s why the funds rate is the key mechanism used by the Federal Reserve to calm inflation.
Simply put, companies and consumers don’t borrow as much when loans cost them more, and that means an overheated economy can cool and inflation may dip.
Will credit card interest rates continue to rise this holiday season?
The Fed’s string of rate hikes, aimed at easing the highest inflation in four decades, are a big reason credit card interest rates have reached record highs just in time for the holiday season.
Some retail credit cards now charge more than 33% interest, topping a 30% threshold that stores and banks were previously able to bypass but seldom did – until now.
“They can charge that much,” said Chi Chi Wu, a senior attorney at the nonprofit National Consumer Law Center. “Credit cards can actually charge whatever they want. It’s a little-known fact.”
The domino effect of a high benchmark rate and soaring credit card interest could put many Americans in financial straits this holiday season.
Though some consumers are paring back to deal with high prices, rising debt and shrinking savings, the average shopper expects to spend $1,652 this year on holiday purchases, according to the consultancy Deloitte, more than was typically spent in the last three years.
A lot of the buying will be done with credit cards. In an October poll of 1,036 shoppers by CardRates.com, nearly 4 in 10 respondents said they intend to have holiday credit card debt in the new year.
The nation’s collective credit card debt was $1.08 trillion, at the end of September, a record high. And the average interest rate was 21%, the highest ever documented by the Federal Reserve.
Savings account impact of high rates
The upside to the Fed’s string of rate hikes has been that consumers were able to earn good interest on their savings for the first time in years. Even when the Fed leaves interest rates unchanged, savers can do well.
Unfortunately, most account holders aren’t making the most of that potential opportunity.
Roughly one-fifth of Americans who have savings accounts don’t know how much interest they’re earning, according to a quarterly Paths to Prosperity study by Santander US, part of the global bank Santander. Among those who did know their account’s interest rate, most were earning less than 3%.
But consumers have time to make a change that could enable them to make more from their savings.
“We’re still a long way from (the Fed) beginning to cut rates,” said Greg McBride, chief financial analyst at financial services platform Bankrate. “This is great news for savers, who will continue to enjoy inflation-beating returns in the top-yielding, federally insured online savings accounts and certificates of deposit. For borrowers, interest rates staying higher for a longer period underscores the urgency to pay down and pay off costly credit card debt and home equity lines.”
The string of Fed rate hikes that began in March 2022 has made it costlier for consumers to borrow as interest rates on credit cards and other loans increased dramatically.
At the same time, inflation has made daily needs more expensive, pushing more Americans to lean on credit cards to get by. But lenders have become more reluctant to issue new cards, so in the midst of the holiday season, more shoppers are seeking higher credit limits, experts say.
In October, the application rate for higher limits rose to 17.8% from 11.2% in the same month the previous year, and from 12.0% in 2019, New York Fed data showed.
For some consumers, a higher limit on a card they already have is about their only option.
“After COVID, inflation and interest rates went out of control … people have less emergency funds for car repairs or buying presents,” said Brandon Robinson, president and founder of JBR Associates, which specializes in retirement strategies. “What they’re doing is using more credit card utilization – over 30% or well over 50% of their credit card allowance – and then can’t get approved for another card because their credit rating is down.”
Inflation is leading more Americans to work multiple jobs
The number of Americans working at least two jobs is at its highest peak since before the COVID-19 pandemic, according to federal data, an uptick that may reflect the financial pressure people are feeling amid high inflation.
Almost 8.4 million people had multiple jobs in October, the Labor Department said, a figure that represents 5.2% of the laborforce, the highest percentage since January 2020.
“Paying for necessities has become more of a challenge, and affording luxuries and discretionary items has become more difficult, if not impossible for some, particularly those at the lower ends of the income and wealth spectrums,” Mark Hamrick, senior economic analyst at Bankrate, told USA TODAY in an email.
People may also be moonlighting to sock away cash in case they’re laid off since job cuts typically peak at the start of a new year.
What is the Federal Reserve’s 2024 meeting schedule? Here is when the Fed will meet again.
What is the mortgage interest rate today?
Mortgage rates are falling, so is it time to buy?
It depends.
First of all, the Fed doesn’t directly set mortgage rates, but its actions have an impact. For instance, when the central bank was steadily boosting its key rate, the yield on the 10-year treasury bond went up as well. Because those bonds are a gauge for the interest applied to an average 30-year loan, mortgage rates increased.
But over the past six weeks, mortgage rates have been declining, averaging 7% for a 30-year fixed mortgage. That’s down from almost 7.8% at the end of October, according to data released by Freddie Mac on Dec. 7.
That may be giving some wannabe homeowners the confidence to start house hunting. For the week ending Dec. 1, mortgage applications rose 2.8% from the prior week, according to the Mortgage Bankers Association.
“However, in the big picture, mortgage rates remain pretty high,” says Danielle Hale, senior economist for Realtor.com. “The typical mortgage rate according to Freddie Mac data is roughly in line with what we saw in August and early to mid-September, which were then 20 plus year highs.”
So, many potential buyers may still need to sit on the sidelines, waiting for rates to drop further, says Sam Khater, chief economist for Freddie Mac. Hale and many other experts believe mortgage rates will dip next year.
Interest rate projection 2024
The Fed is expected to cut interest rates next year, though markets and economists disagree about how many rate cuts there will be.
Futures markets forecast there will be four or five rate cuts in 2024, amounting to a quarter of a percentage point each. The cuts, they predict, should start by spring, and ultimately drop interest rates as low as 4% to 4.25%.
But core prices, which leave out the volatile costs of food and energy and are the metric followed more closely by the Fed, ticked up 0.3% in November, higher than the 0.2% increase the month before. That might make the Fed more hesitant to nip rates in the immediate future.
Goldman Sachs and Barclays expect there to be only two rate decreases in 2024. And Fed Chair Jerome Powell has cautioned in recent public remarks that it was “premature” to talk about rate cuts.
November inflation report
Inflation dipped slightly last month, with falling gas prices mitigating the impact of rising rents.
Consumer prices overall increased 3.1% from a year earlier, slightly below the 3.2% rise in October, according to the Labor Department’s consumer price index. That slower pace moves the inflation rate nearer to the level, reached in June, that was the lowest in over two years. Month over month, prices increased a slight 0.1%.
Core prices, however, which leave out the more erratic costs of food and energy and which are more closely monitored by the Fed, increased 0.3% in November after rising 0.2% the previous month. That means core inflation’s yearly increase remained at 4%, though it’s the lowest level since September 2021.
[1/2]A man walks past houses ‘For Sale’ in a residential street in London, Britain, September 27, 2022. REUTERS/Hannah McKay Acquire Licensing Rights
LONDON, July 11 (Reuters) – A key British mortgage rate hit a 15-year high on Tuesday when it rose above the levels reached in the aftermath of September’s “mini-budget” crisis, adding to strains on the country’s slowing housing market as the Bank of England battles stubborn inflation.
The average two-year fixed residential mortgage rate climbed to 6.66%, narrowly exceeding the 6.65% touched on Oct. 20 and the highest since August 2008 when it stood at 6.94%, according to data provider Moneyfacts.
Britain’s housing market activity staged a recovery in early 2023 from the turmoil triggered by the unfunded tax-cutting plans of former Prime Minister Liz Truss. But homeowners and buyers have faced renewed mortgage pain in recent months.
Fixed mortgage deal rates have risen rapidly in recent weeks as stickier-than-expected consumer price inflation, which held at 8.7% in May, pushed up bond yields and increased market bets on the BoE’s benchmark rate peaking at 6.5%, up from 5% now.
Governor Andrew Bailey said last month there were signs of more persistent underlying inflation pressures after the BoE unexpectedly raised its Bank Rate to 5% in an effort to tame the highest inflation rate among the world’s big rich economies.
Swap rates, a key measure lenders use to determine the cost of mortgage borrowing, have also soared. Two-year swaps jumped by 0.89 percentage points over the course of June.
The surge has prompted major mortgage lenders to repeatedly reprice home loan offerings.
Lenders including Nationwide, Lloyds Bank and Santander on Tuesday told lawmakers on the Treasury Committee in Britain’s parliament that mortgage payment arrears had increased slightly but remained below pre-pandemic levels.
“Undoubtedly, households and customers are feeling the effect of not just mortgage rates increasing but the wider cost of living crisis … but arrears remain very low in a historical context, and still below what we’d have seen pre-COVID,” Andrew Asaam, homes director at Lloyds Banking Group told lawmakers.
However, most households have yet to face the impact of higher borrowing costs as they are still locked in to previous deals.
British homebuyers typically take out mortgages with an interest rate that is fixed for two or five years, and then remortgage on to a new fixed rate or accept a variable rate.
Trade body UK Finance estimates 800,000 Britons will need to refinance loans in the second half of this year, and a further 1.6 million in 2024 of a total of nearly 7 million fixed-rate mortgages that are outstanding.
Analysis from the Resolution Foundation, a think tank, shows the average homeowner who refinances a home loan in 2024 will have to pay an extra 2,900 pounds ($3,732.88) a year.
House prices have also shown the hit to the market. Mortgage lender Halifax reported a 2.6% annual fall in house prices in June, the largest decline since 2011, while Nationwide reported a 3.5% drop year-on-year last month, the biggest since 2009.
($1 = 0.7769 pounds)
Reporting by Suban Adbulla and Sachin Ravikumar; Editing by William Schomberg, Kate Holton and Andy Bruce
Our Standards: The Thomson Reuters Trust Principles.
Fortune magazine released its top 10 list of the most admired mortgage companies in the March 17th edition, which begs the question: What makes a company admirable?
Topping the list was LandAmerica, a title insurance company that reported a fourth-quarter loss of $45.9 million, closed 160 offices, and currently faces an antitrust lawsuit that claims it artificially inflated rates.
Second was Washington Mutual, a Seattle-based thrift that saw its shares fall to their lowest point since 1995 last week amid concerns it faced billions more in write-downs despite recording its first quarterly loss since 1997.
In a close third was Fidelity National Financial, a title insurance provider that was also involved in the previously mentioned antitrust suit and whose shares are trading near a 52-week low.
Fourth was First American, another title insurer/appraisal company that was part of the aforementioned antitrust suit, which posted an annual loss for 2007, cut 1,100 jobs, and whose eAppraiseIT unit was accused of colluding with Washington Mutual to inflate appraised values.
That brings us to Sovereign Bancorp, which posted a $1.6 billion loss and scrapped its dividend amid higher credit losses, leading the company to fire its CFO following the CEO’s departure last year. A sale to Santander Bank is also starting to slip away.
Next is IndyMac, the Pasadena, CA-based mortgage lender that recently posted its first annual loss, cut 24 percent of its staff, and warned this week that it could miss first-quarter estimates as well.
Stewart Title followed, a title insurer that recorded a fourth-quarter loss and its first annual loss since 1974 while slashing 2,100 jobs, or roughly 20 percent of their workforce over the last two years and shuttering 145 locations.
Freddie Mac claimed the eighth spot after it posted a $2.5 billion fourth-quarter loss and an annual loss of $3.1 billion, while cutting its dividend in half and selling $6 billion in stock to raise much needed capital.
Troubled jumbo mortgage lender Thornburg took the nine hole despite teetering on the brink of bankruptcy after receiving margin calls it couldn’t meet and seeing its share price fall as low as 69 cents earlier this week.
And you guessed it, Countrywide Financial somehow rounded out the top ten, despite the fact that it faces class action lawsuits, scrutiny from Congress over executive pay, an FBI probe, probes from state attorney generals, and widespread criticism from the general public and consumer advocacy groups who claim it engaged in predatory lending.
UK mortgage war ‘under way’ as lender offers 4.99% fixed rate
Brokers say borrower confidence likely to lift after the first below 5% deal surfaces since June with more offers likely soon
A fixed-rate mortgage priced at below 5% has gone on sale for the first time since June as leading lenders announced a fresh wave of home loan reductions.
Brokers said a mortgage rate war was “well and truly under way” and that the lower pricing should provide a boost to borrowers worried about the imminent end of their current deal, as well as would-be homebuyers who have been sitting on the sidelines.
UK lenders have been reducing their rates for several weeks, and the last few days have seen a flurry of reductions, with further cuts due to take effect on Friday courtesy of banks including the Halifax.
On Thursday, a five-year fixed-rate deal priced at 4.99% was launched by The Mortgage Works, a division of Nationwide building society, which brokers said was the first sub-5% fixed deal they had seen for several months. It is thought it is the first fixed-rate product priced at below that level since late June.
The 4.99% product is a buy-to-let deal rather than a standard residential mortgage and is available to people borrowing up to 55% of the property’s value. Ranald Mitchell, a director at the broker firm Charwin Private Clients, said: “Seeing rates starting with a 4 is a sight for sore eyes and could provide a stimulus to the market and borrower confidence.”
Moneyfacts, the financial data provider, said the average rate on a new fixed-rate deal lasting for five years was now 6.14%, though there are best-buy deals available that are considerably cheaper than that: for residential mortgages, the cheapest five-year fix on Thursday was priced at 5.12%.
Halifax has announced reductions of up to 0.5 percentage points on selected fixed deals, taking effect from Friday. It means it will have five-year fixed deals priced at 5.15%.
The Mortgage Works has also cut rates by up to 0.5 percentage points, with effect from Thursday, while brokers say Coventry building society is also reducing some rates on Friday.
These moves come hard on the heels of cuts by other high street players. On Wednesday, Nationwide reduced some of its fixed rates by up to 0.29 percentage points, while on the same day Santander trimmed selected new fixes by up to 0.14 percentage points.
Mortgage costs had been rising for months, but UK lenders have been reducing their rates since the second half of July after it emerged that UK inflation fell further than expected in June.
However, another Bank of England rate rise next week – a decision will be announced on 21 September – could put the brakes on further reductions. The Bank’s base rate is now at 5.25%, and many commentators anticipate a rise to 5.5%.
Amit Patel, an adviser at the broker Trinity Finance, said: “After a summer of doom and gloom, it feels that as we head into the autumn months, we may have turned the corner.”
Diarmuid Phoenix, an adviser at Mint Mortgages & Protection, said: “Seeing the return of rates under the 5% bracket in line with falling swap rates should hopefully give a boost of confidence to borrowers who have been living in fear of the end of their current fixed-rate deals, as well as those who have been sitting on the fence waiting for rates to come down before purchasing.”
HSBC and NatWest cut mortgage rates again as rivals tipped to follow
Decision will ease some pressure on UK homebuyers and people seeking remortgage deals
HSBC and NatWest have announced a fresh round of mortgage rate cuts and Britain’s remaining large lenders are expected to follow suit in a move that will ease some of the pressure on hard-pressed Britons.
HSBC said it was cutting rates across many of its new fixed products – including some of its first-time buyer, home mover and remortgage deals – with effect fromTuesday, when full details of the reductions will be published.
Fellow high street lender NatWest said it would also be cutting rates from Tuesday.
The latest reductions will improve conditions for homebuyers and those looking to remortgage on to a new deal.
NatWest announced reductions of up to 0.35 percentage points on selected fixed deals. A five-year fixed rate deal aimed at homebuyers with a 5% deposit that is currently priced at 6.39% will result in its rate being cut to 6.04% at the bank.
Mortgage costs had been rising relentlessly for months but UK lenders have been reducing their rates since the second half of July after it emerged that UK inflation fell further than expected in June, prompting speculation that the Bank of England would not raise interest rates by as much as previously expected. The Bank’s base rate is 5.25% after an increase from 5% in August.
Nicholas Mendes, a mortgage technical manager at the broker John Charcol, said HSBC had “laid down the gauntlet and shown they mean business … This is their second rate reduction in a week, along with criteria changes which extend terms to 40 years.”
Accord Mortgages, part of Yorkshire Building Society, also said that all of its fixed rates were being cut by 0.20 percentage points from Tuesday.
Last week, Nationwide Building Society reduced some of its fixed and tracker rates by up to 0.15 percentage points.
Stephen Perkins, the managing director of the broker firm Yellow Brick Mortgages, said: “All these rate reductions are starting to feel like an avalanche … No doubt there will be more of these reductions over the week, as all lenders follow in a conga line.”
Lewis Shaw, the owner of the broker Shaw Financial Services, said that with NatWest following hot on the heels of HSBC, “There’s every chance we could see the remaining big four [Lloyds Banking Group, Barclays, Nationwide and Santander] come to the party this week, too.
“It would appear that lenders are struggling to get new business, and the rate tap is the only tool they can turn to.”
We’ll send you a myFT Daily Digest email rounding up the latest UK mortgage rates news every morning.
High street lenders announced further reductions in UK mortgage rates on Tuesday, although the average prices remain above the levels they reached in the immediate aftermath of last year’s disastrous “mini” Budget.
The latest cuts come in the wake of comments by Bank of England governor Andrew Bailey last week that the UK could avoid further rate rises.
“There’s been a bit of a shift in markets over the last week or so,” said Aneisha Beveridge, head of research at estate agency Hamptons. “Since Andrew Bailey came out with his comments, swap rates [which banks use to price mortgages] are down a little bit.”
Nationwide, the UK’s second-largest mortgage lender, will reduce costs by as much as 0.29 percentage points while Santander, the fourth-biggest provider, will trim costs by as much as 0.14 points. Smaller lenders such as Hinckley & Rugby Building Society, Skipton Building Society and MPowered Mortgages have already pushed through cuts.
Last week, Bailey told MPs that interest rates, which are at 5.25 per cent after 14 consecutive rises, were “much nearer” to the top of the cycle.
The BoE is expected to increase base rates by another quarter point next week but investors are split on whether there will be one further rate rise before the end of the year.
Beveridge said the recent cuts to mortgage rates were in part owing to the markets anticipating that base rates would gradually start to fall from next year. “Lenders take the swap rates all the way through to [the end of their term], so they’re already pre-empting those base rate cuts for next year,” she said. “You might be starting to see mortgage rates fall a bit more now and less next year if [base] rates stay higher for longer.”
The average price of a two-year fixed mortgage on Tuesday was 6.66 per cent, according to Moneyfacts. They reached 6.85 per cent at the start of August, the highest level since 2008, but have fallen on the back of better than expected inflation data.
But average borrowing rates are still above the levels reached last October when unfunded tax cuts in then-prime minister Liz Truss’s “mini” Budget triggered intense market volatility and sent the cost of home loans soaring.
“Affordability is shaping the lending that is going ahead. Higher mortgage rates have made it more difficult than ever for buyers on a single income to afford a home,” said Andrew Wishart, senior property economist at Capital Economics.
BoE quarterly data released on Tuesday showed that UK residential mortgages in arrears leapt up to a seven-year high by value in the three months to June.
Update 8/21/23: As American Express is now charging a fee.
If you’ve ever had a credit card stolen or misplaced one, you’ll know that sometimes it can take up to 10 business days for a replacement card to arrive. What’s worse is when you need to meet a minimum spend requirement on a new card and it takes an age to arrive, eating into the time you have allocated to hit that spending requirement.
Thankfully some banks allow you to receive your card by expedited shipping. In this article, we will look at what banks offer this, the cost if any and how to request your card be expedited.
This information will be different if this is your first card with this particular credit card provider.
When you first sign up with a new credit card issuer they are required to send you a copy of their lending agreement. Because this can be quite bulky, the issuers will send it by snail mail and as such your card cannot be expedited.
Alliant. Only allows expedited shipping on replace cards for a fee. New cards cannot be expedited.
American Express: American Express will expedite all lost/stolen cards if you ask. For new cards, it seems to depend on the card you apply for. A lot of the premium cards (e.g Platinum Card® from American Express) will be automatically expedited and you’ll receive them within 2 days. For other cards, you’ll need to request your card be expedited – the answer people receive seems to vary from customer service representative to representative so if you don’t get an answer you’re looking for try hanging up and trying again. Call their main customer service line on 1-800-528-4800 to inquire. Also adding yourself as an authorized user/employee might work as well. It looks like American Express are now charging a fee for all cards, apart from the Platinum.
Bank of America: If you have a valid reason (e.g you’re leaving the country and need the card before you leave) they will waive their fee and overnight your card. Use their contact us page to find the relevant contact number.
Barclaycard: They can overnight cards but it comes with a cost of $15. Customer service representatives have the ability to get this waived though.
BBVA: They can expedite your shipping, but they will charge a $50 fee, unsure if it’s possible to get this fee waived or not.
Capital One: They don’t offer expedited shipping on new accounts unfortunately. It’s possible to get 1-2 day shipping on replacement cards but you’ll have to kick up a fuss and possibly even a fee to get them to do it.
Chase: You can get any card expedited with Chase for free (1-2 day shipping). All you need to do is ask, you can either do this by sending a secured message or by calling 1-800-432-3117 (their general credit card customer service line)
Citi: They will only expedite cards that have been lost or stolen. They will not expedite new cards. Call 1-800-756-7047 to speak to a representative. Update: reader Shan was able to request expedited shipping on a new card.
Discover: They expedite new cards automatically, they will also do this for all lost or stolen cards. There is no additional charge.
NFCU: Allows expedited shipping (at least on the Flagship rewards card) but they charge a fee of $12.99.
Santander: Charge a fee of $35 to expedite card shipping and $35 to expedite PIN number shipping.
USAA. Charge a fee of $8 to expedite, otherwise card will arrive in 8-10 days. Keep in mind they will give you an instant credit card number, but this only has a credit limit of $1,000.
U.S. Bank. They seem to do expedited two day shipping for their new Altitude Reserve card. Also available on other cards, might come with a $10 fee.
Wells Fargo. They will expedite but they charge a $16 rush delivery fee. Not possible on business cards: 1,
We’ll send you a myFT Daily Digest email rounding up the latest Mortgages news every morning.
UK lenders have cut the cost of mortgages, offering hope for the housing market in a week when the Bank of England hiked rates to their highest level in 15 years and house prices fell the most since 2009.
The BoE raised rates to 5.25 per cent on Thursday, its 14th consecutive increase, and Huw Pill, BoE chief economist, indicated on Friday that rates were likely to stay high for a prolonged period.
But over the past few weeks, markets have priced in a lower peak of interest rates next year and it is these “swaps” rates that banks use to price mortgages.
NatWest, Halifax and Virgin Money have all cut rates this week — by as much as 0.41 per cent in some cases. That action followed cuts by Nationwide, Barclays, TSB and HSBC last week. Santander and Coventry Building Society also announced reductions.
David Hollingworth, director at London & Country Mortgages, said that Thursday’s news had been priced in to lenders’ calculations.
Aneisha Beveridge, head of research at Hamptons, the estate agent, said: “If everything follows the BoE expectations from here on in, I think we’ve seen mortgage rates peak about a month ago. They might come down a tiny bit more but they won’t come done too much until we see inflation falling across the board.”
Aaron Strutt, director at broker Trinity Financial, said: “We are starting to see more of the lenders reducing rates.”
In spite of the individual rate cuts, the average two-year fixed mortgage rate is still at 6.85 per cent, close to the highest level in 15 years, according to data from website Moneyfacts.
The pain of higher interest rates is having a very uneven impact in the housing market, according to research by Savills.
Nearly three-quarters of cash buyers surveyed by the estate agency said that their purchasing budget had remained the same. But nearly 60 per cent of those seeking to take out a mortgage with a loan-to-value ratio above 50 per cent said they had cut their budget.
“Cash buyers who are not exposed to concerns around rising interest rates have been able to drive ahead strongest in the current market,” said Frances McDonald, director of research at Savills.
By contrast, Chris Storey, chief commercial officer at digital lender Atom Bank, warned that the 1.4mn households due to come off fixed rates this year faced a steep increase in costs.
“People will perhaps have to become more accustomed, in the long term, to higher interest rates than they’ve faced in the last 15 years . . . especially if they have a payment shock coming off of a fixed-rate mortgage,” he said.
“The Bank of England might have to start cutting rates late next summer,” said Beveridge. “You might see mortgage rates react a bit earlier because they’re priced off of swap rates.”
The BoE’s Pill said: “Monetary tightening . . . is working. There’s no pre-determined path for interest rates, but rather we are responding as the economy and the data evolve.”