Mortgage rates increase despite base rate being kept at 0.1%
The Bank of England Monetary Policy Committee (MPC) has voted to maintain the base rate at 0.1% despite market pressures pushing them to raise rates.
In the last MPC meeting in September, there was a 9-0 vote to keep rates at their current level as the “elevated global cost pressures will prove transitory”. This time, the committee voted 7-2 to keep the bank rate at 0.1%.
Are there still competitively priced mortgage rates available?
The cheapest two-year fixed rates are priced at just over 1%, while five-year fixes start at 1.15% for borrowers with larger deposits. Many first-time buyer rates have been reduced in price recently, and 10% deposit mortgages are available below 2%.
Is it a good time to take a new mortgage?
If you are in the process of buying somewhere or your remortgage is due soon, it is well worth securing one of the super-cheap rates as they have been going up.
The biggest lenders have raised their rates over the last few days, and the sub-1% rates are being withdrawn. Nationwide Building Society has pulled its tracker rates, while Halifax, Santander, HSBC and Coventry Building Society have all increased their prices. Some lenders have raised their prices a few times. Many of our clients are keen to swap to new deals because they are worried about rising repayments. Many of them are halfway through their two or five-year fixes, so they cannot take a new deal without paying a fee. Some are paying the early repayments charges to lock into cheaper long-term rates.
Trinity Financial's brokers can assess your mortgage and check whether it makes sense to pay the early repayment charges and swap to another fixed or tracker rate. For many borrowers, the repayment charges are too high so it is not worth switching products until it finishes.
How many borrowers are on variable rates?
Around a quarter of homeowners have mortgages linked to variable rates, according to trade association UK Finance. This group includes 850,000 on tracker rates and 1.1 million on standard variable rates. Around three-quarters of mortgage borrowers are on fixed-rate deals.
Billions of pounds worth of fixed and tracker rate mortgages will expire over the coming months. According to data firm CACI, there is a reported £39.6bn of rates due to revert to high standard variable rates in January. Source: Mortgage lender updates, CACI, BBC News
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