April 25th, 2018. Chris Evans
Mortgage Costs Are at a 2 Year High, Could the Base Rate Be About to Rise?
In November 2017, rates rose for the first time in a decade, and now the rumours are swirling once again with many experts reporting this week that they predict the UK base rate will increase again very soon. So, should prospective home buyers act quickly?
Will Mortgages Become More Expensive Soon?
According to The Guardian, the average homeowner with a £175,000 loan is now paying £44 a month more now than last autumn. In fact, rates on mortgage deals have reached their highest levels in two years.
The average mortgage rate has risen 0.25% in the last month, with the average two-year fixed mortgage rate now at 2.5% (the highest since July 2016).
This comes as many lenders increase their prices in advance of a predicted interest rate rise next month. Comparison site uSwitch has carried out research which found lenders have recently increased their rates, with Barclays being one of the most active by changing 60 products.
So, why the increase? Well, there is a meeting of the Bank of England’s monetary policy committee next month and, with predictions that the base rate will raise another twice by 2020, many industry insiders are claiming there will be a further base rate rise from 0.5% to 0.75% as a result of this get together.
Should You Fix Your Mortgage Now?
If the base rate does rise next month, then mortgage rates will likely increase very quickly to keep in line with this. If you’re currently on a standard variable rate (SVR) this could mean substantially more each month.
So, although next month’s rise is not a cert, if you’re coming to the end of your current loan period or are looking to purchase your first home, it may be safer to act sooner rather than later.
As MoneySavingExpert.com Managing Editor, Guy Anker, has been quoted saying:
“With rates on the up it’s vital anyone coming to the end of a fixed or tracker introductory deal – or who is paying their lender’s potentially expensive standard variable rate – checks if they can save by remortgaging and locking in a cheap deal while they last. While rates are rising, they are still extremely cheap historically.
“The risk is that by waiting, rates go up even further, especially if the base rate rises in the coming weeks or months.”
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Article By Chris Evans
April 25th, 2018
Chris heads up the specialist mortgage team which encompasses first charge mortgages, buy-to-let finance and second charge loans.
Chris has spent the last 17 years gaining experience in mortgages, protection and secured loans with roles at Legal & General, Nemo and Mortgage advice bureau giving him a broad understanding of the property finance markets.
Having Joined the Pure Group in 2017 he has worked with Ben to establish and grow the 1st and 2nd charge proposition exponentially in a short period of time. Chris has overseen the recruitment and development of an extremely experienced team of employed and self employed advisers that continues to deliver year on year growth.See more articles by Chris