Several lenders have increased their mortgage rates over the past week on the back of rising money market rates, making now a good time to consider securing a new deal.
For example, Santander has raised the pricing on a number of its fixed-rate mortgages by up to 50 basis points, taking its two-year fix at 75 per cent loan-to-value (LTV)from 1.44 per cent to 1.99 per cent with a £999 fee. On five-year fixes, the rate increased by 0.45 per cent to 2.14 per cent on its fee-free product for new mortgages, again at 75 per cent LTV.
However, it isn’t all bad news – at the same time as increasing its fixed rates. Santander also reduced its tracker pricing on high LTV deals by up to 0.25 per cent. Borrowers who are not concerned about the prospect of rising interest rates. And want more flexibility may prefer one of these ERC (early repayment charge)-free deals. Which can be repaid at any time without penalty. This may be useful if you are expecting significant bonuses or other income, such as an inheritance. Which can be used to pay down your mortgage or even pay it off early.
The Bank of England raised interest rates
The Bank of England raised interest rates by 0.25 per cent in December, followed by a further 0.25 percentage points in February. With inflation rising to a 30-year high of 5.5 per cent in January, well above the Bank’s 2 per cent target. There is increased speculation that another rate rise will take place at its next meeting on 17 March.
However, borrowers shouldn’t panic; even if the Bank increases the Base Rate again. It will still be at a relatively low level from an historical perspective. There have also been indications that further rate rises will be modest, with Sam Ramsden. A member of the Monetary Policy Committee telling The Times. I do not envisage the rate rising to anything like its pre-2007 level of 5 per cent or above. Let alone the kind of levels we saw before the MPC was formed in 1997.’
While that is reassuring, borrowers may still wish to consider fixing their mortgage if they haven’t already. As this will protect them from further rate rises and help with budgeting. Products can be booked for up to six months before they are needed. Depending on the lender, which is useful in a market where rates are rising. If you secure a rate now, it will give you peace of mind and you can move onto it when your current deal comes to an end.
A whole-of-market broker such as AWS Private Finance will be able to advise as to the best mortgage for your circumstances. Get in touch for more information.