Déjà vu? Nope, interest rates are rising again.
With an inflation target of 2%, the members of the MPC who vote on rate rises and falls are set to push rates by another 0.5%.
Why have rates been going up?
The Bank of England (BoE) has been increasing the base rate since December 2021 to try to control inflation, which currently stands above 10%.
That rate is charged to other banks and lenders when they borrow money from the BoE and then usually, it’s passed on to the customer when they pay interest for borrowing.
That’s not the only factor pushing rates right now. Some lenders increased their rates to slow down demand and avoid being overwhelmed by customers intending to fix their interest rates.
Another increase in monthly bills
When interest rates rise, more than 2 million people with a tracker or variable rate mortgage could face an immediate increase in their monthly payments.
A tracker rate rising from 4.5% to 4.75% costs around an extra £31 a month on a £200,000 loan taken over 25 years. That’s bad news for those on low incomes.
356,000 mortgage borrowers could face difficulties with repayments by July 2024, according to the Financial Conduct Authority.
Three-quarters of mortgage customers have a fixed-rate
Those with a fixed rate of interest on their mortgage won’t see a change to their monthly repayments for now.
If you have a fixed-rate mortgage agreement, your rate is set for an agreed amount of time, so changes to interest rates don’t affect your pocket. When it comes to the end of the fixed rate, you might be hoping to keep the good rate you’ve got or find a lower one.
It may be possible, depending on your current rate and your financial situation, but in the current economic climate, you might be disappointed with the jump in rates on offer.
You can still find an affordable mortgage if you know where to look and how to submit a mortgage application without error and with the necessary documents. That’s where we come in.
If you have a fixed-rate period ending soon
Start looking for a new deal now. 6 months is usually a good amount of time to give yourself to compare and choose a lender, whether that be your current one with a new deal, or a new one altogether. If your timeline is tighter than that - don’t worry, we can still help.
Speak to a mortgage professional about whether a fixed rate is a good option for you because you might be better suited to a variable rate, depending on your situation. Everyone is different but we have a team of specialists who work hard to find practical solutions that work.
Rates change regularly
Daily changes to interest rates and product availability affect how much you pay for a mortgage. To get access to the latest rates ask a mortgage broker who can compare deals and filter out the ones you’re not eligible for to save you time.
It’s our job to listen to what you need from a mortgage, check your eligibility, compare deals and get you approved by an affordable lender.
Deals can be pulled, on a daily basis too
When a lender’s mortgage product is applied for by lots of people, they hit their capacity and a product can be pulled from the market. Working with a mortgage broker can help you avoid missing out on a cheap deal because your application can be completed, without error and sent in good time.
Are good mortgage deals available?
You can access over 12,000 mortgage deals from 90 lenders when you work with one of our experts.
Interest rates aren’t the only factor that affects whether the deal you get on a mortgage is good value or right for you.
You also need to look at the cost of fees and the flexibility of the agreement. You might want to switch in the future or exit your contract but the lender may charge you depending on who you opt for. These things and more need to be carefully compared and considered.
How borrowers can prepare for these changes
Consider refinancing
Either with a lender or a new product that could make your mortgage cost less overall. Staying on a rate that could jump and cause you financial hardship leaves you open to vulnerabilities. Always seek independent advice before switching your mortgage.
Look at your most recent credit report
Search for your credit history with the various credit reference agencies in the UK. This is what some lenders will look at before deciding whether they can accept you for a mortgage, so ideally you want it to show a good record of making timely repayments. You can still find a deal with a good interest rate if you have bad credit but usually, the products with lower rates are reserved for good credit customers.
Find a good mortgage broker
We work with specialist lenders, plus familiar banks and building societies from across the UK. With access to over 12,000 products and 90 lenders throughout the UK, we’re confident that we can help.
What to expect from the Mortgage Hut
Non-judgemental advisors that listen
No impact on your credit score
We don't charge a fee
Specialist in self-employed mortgages
We welcome people with bad credit
Clear but personable communication
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Whatever your situation, we know that everyone's circumstances are different. Call, use our contact form or message us on WhatsApp.