Once again, a review of the base rate has taken place and it has been increased. It has risen by 0.25% to reach 4.5%, which is the highest rate since 2008. The Monetary Policy Committee (MPC) had a split vote for the 12th consecutive rate increase. This increase has been predicted as the last one, with rates expected to stabilise after that. If that prediction is right, it will be a huge relief to property owners.
But in the meantime, this latest increase is another blow for those already struggling to make their mortgage repayments. With the cost of living already so high, many property owners are now facing a further increase in their monthly mortgage outgoings.
How will mortgage rates be affected in May?
So how is this further base rate increase expected to affect mortgage rates? If you have a tracker mortgage, your rate will, unfortunately, increase again in line with the Bank of England base rate. If you have a standard variable rate (SVR), this will depend on your lender. Each lender sets its own SVR and it’s likely that your lender will increase your rate slightly. This will be to recoup some of the increased charges they’ll also have to pay.
With a fixed rate mortgage, your rate will stay the same for the duration of the fixed term. When you start looking for a new fixed rate to switch to, you’ll probably find it’s higher than the one you’ve currently got. However, fixed rates for mortgages have been falling recently as mortgage lenders have competed with each other to gain more business.
Currently, 5-year fixed-rate deals are better than those with a 2-year fixed period. Rate reductions have been significant in higher loan-to-value (LTV) brackets as lenders have strived to help more first-time buyers. Some lenders have also reduced their variable rates to attract more borrowers. This means it’s a good idea to look at all of the options available to you when taking out a new mortgage.
We’re here to discuss your mortgage options and give you expert guidance
As interest rates are expected to stabilise, lenders are less inclined to need to factor in increases to their new mortgage products. It’s hoped that they will continue to offer more competitive mortgage rates, encouraging more borrowers to choose their deals.
If you’re thinking about switching to a new mortgage deal, give us a call on 01322 907 000. Our mortgage brokers have unrestricted access to the market, including deals that are only offered by lenders through brokers. They can check your current deal and compare it with the others available. That way, you can be sure that you’re benefitting from the best rate and terms to meet your financial needs.