The latest average mortgage rates have gathered pace this week and are up by an average of 0.18%, compared to last week’s 0.13%, according to Rightmove.

However, Rightmove’s mortgage expert Matt Smith believes there is optimism in some quarters that rates may start to show signs of stabilising – albeit dependent on an imminent inflation update.

“Despite the rate rises we’ve seen this week, swap rates – the underlying costs of mortgages for lenders – have responded positively to the news that last week’s US inflation figures fell to a two-year low, and this has taken some pressure off lenders to increase rates further.

“Some commentators have said this may be the peak for mortgage rates, but the UK inflation data for June will be published tomorrow and will be key to what happens next with the pricing of fixed rates”.

Smith adds: “The market is expecting to see inflation fall back in June, but as we’ve seen in the past couple of months, if it remains stubbornly high, and doesn’t fall in line with expectations, this could cause mortgage rates to rise further”.

As Smith points out the best-buy, short-term fixed-deals are still approaching 6%, which is likely to be a concern to those looking to take out a mortgage soon.

“Some buyers may be putting their moving plans on hold while they reassess higher costs and the impact on their budgets, and this has impacted the number of home sales agreed in June.

“But overall, demand from buyers is still 3% higher than 2019’s more normal market level. Estate agents are reporting that homes that are realistically priced are still attracting motivated buyers who don’t want to miss out on the right property that is not over-priced, and that they can still afford.”

Earlier today Mortgage Strategy reported that average two- and five-year residential fixes held steady for the second day in a row after weeks of rises showing signs the market is pausing ahead of tomorrow’s inflation report, according to Moneyfacts.

The average two-year fixed residential mortgage rate is 6.78%, says the research firm, unchanged from Friday.  

While the average five-year fixed residential mortgage rate stands at 6.30%, also unchanged from Friday.  

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