The Bank of England made its long-awaited move in December, raising interest mortgage rates by 0.15 percentage points to 0.25 per cent. This didn’t seem to dent buyer confidence. However, with the Halifax and Nationwide building society both recording higher house prices for the month. But with inflation also rising to a near 30-year high of 5.4 per cent in December. It looks as though that rate rise may be only the first of a few. With the markets expecting another increase as soon as the February meeting.
Even so, we are in a low interest rate cycle. Even with two or three base rate rises. Interest rates will remain at relatively low levels compared with where they have been historically. The Bank will be mindful of the fact that the economy is not in a position to cope with a number of steep rate hikes. The rising cost of living is going to stretch consumers enough. Without a hefty rise in mortgage payments on top of that.
Remortgaging
With money market rates rising on the anticipation of further rate increases. And some lenders re-pricing upwards accordingly. It is a good time to look at your existing mortgage and consider re-financing, or to take out a new deal. Not all lenders have raised rates, with HSBC reintroducing a sub-1 per cent mortgage this week. Although admittedly this is a two-year tracker at 0.99 per cent, rather than the ever-popular fixed-rate deals.
Available to those remortgaging with at least 40 per cent equity in their homes. This will appeal to those who don’t need the certainty of a fixed rate to help with budgeting. Also, it has no early repayment charges at any time. So it will suit those borrowers who are expecting lump sum bonuses. Which can be used to pay down the mortgage. Meanwhile, those borrowers who prefer more security can fix with the lender for five years at 1.44 per cent.
Fixed-rate mortgage
Those requiring a higher loan-to-value mortgage will also be pleased to find that rates on these deals are falling. They became relatively expensive at the height of the pandemic as lenders pulled back from what they regarded as higher-risk lending but they have returned. Which is good news for first-time buyers in particular.
Nobody knows for sure where interest rates and indeed mortgage pricing is going but borrowers can protect themselves with a fixed-rate mortgage. Prices of these have risen since November but there are still competitive fixes of two and five years available at sub-1.5 per cent for those buying or remortgaging. Products can be secured for three to six months, depending on the lender. So it may be worth applying for a rate ahead of when you need it. So that you’ve got it if the base rate goes up in the meantime.
If you are coming up to remortgage or haven’t done so in a while, or are looking for a new mortgage deal, it is worth seeking advice from a whole-of-market broker such as AWS Private Finance. We will identify the right lender for your particular situation, comparing all the products on the market. Whether you are employed, a small business owner or a day-rate contractor. We compare all the costs and find you a competitive deal, guiding you through the process from start to finish, saving time and hassle. Get in touch to find out more.
