"Amid more political and economic uncertainty over the last few weeks and with markets now pricing in a 0.75% interest rate rise at the Bank of England’s Monetary Policy Committee's meeting this morning, few homeowners will avoid the shockwaves caused by rocketing rates. The shocking mortgage rate trend spells gloomy winter for homeowners.
We were shocked to see that the lowest 5 year fix is from Skipton Building Society for Intermediaries at 5.33% - up significantly on the best rate for a 5 year fix just last month which was from Halifax at 3.93% for purchases. (We'll be updating our
best mortgage rates page after the BoE announcement).
It's set to be a gloomy winter then, with eye watering mortgage costs for those coming to an end of two and five fixed rate deals alongside spiraling living costs. These higher rates are also bad news for the 2 million people on variable rate mortgages who will see their mortgage payments instantly soar.
With such a fast-changing mortgage market, consumers shouldn't risk relying on their lender to find them the best deal. Use a mortgage broker to shop around for the best deal. And start the remortgaging process sooner rather than later; it can take six months. Not all lenders’ offers will last for 6 months but by starting the process early you may be able to snap up a rate that is affordable for you. And if rates go down before the deal is done, you could always jump to a better deal for a small rebooking fee.
We'd like to
remind homeowners struggling with increased rates that they do have options and their first port of call should be to speak to their lender. Options include extending the mortgage term to reduce monthly payments, reducing what you pay for a short period,
mortgage holidays or changing temporarily to interest-only payments. We've got more advice on how to
beat interest rate rises here.
It's a doubly difficult time for first-time buyers as they see their purchasing power diminish alongside a depleted number of 95% mortgages. The last time high loan-to-value mortgages disappeared during the pandemic the Government stepped in with the
Mortgage Guarantee scheme. The government is due to review the need for the scheme ahead of its end date in December. We're calling on the government to give clarity on this ASAP.
And if we can find a silver lining to the current financial markets, it's that now is a good time to review savings accounts and shop around as there are some good deals on the market. Savings rates are at their highest since 2009, with fixed-rate accounts now offering interest as high as 4.85%. Don't be complacent, this is no time for misplaced brand loyalty: shop around.
