Borrowers expecting mortgage rates to drop have hopes dashed
Major lenders have raised rates on new deals in recent days, leaving many borrowers needing to make a decision.
Mortgage borrowers in the UK are facing higher costs as lenders announced recent increases in loan rates, leaving those who had hoped for a drop disappointed. Analysts are uncertain if more rate hikes are forthcoming, but advise individuals nearing the end of their current deals to act swiftly. For someone on a standard two-year fixed-rate mortgage, borrowing £250,000 could lead to an additional £120 per month in repayments compared to rates at the beginning of March when the Iran war started.
The rise in government borrowing costs, coupled with a 5.82% yield on a 30-year UK bond, has contributed to the increase. The Bank of England's governor, Andrew Bailey, is likely to address the bond market volatility during his upcoming Treasury Committee appearance. Major lenders have subsequently raised their rates in the past few days, with Rachel Springall of Moneyfacts stating that borrowers should not delay seeking advice to navigate the mortgage market.
Many lenders permit people to secure a new deal six months before their existing one expires, giving them a chance to switch if costs decrease before the new one takes effect. Financial experts urge potential buyers and borrowers to plan early and seek guidance, as multiple small rate hikes can deter people from purchasing homes.
Currently, over 90% of UK homeowners have fixed-rate mortgages, with the average rate on a two-year deal at 5.65% and on a five-year product at 5.70%.
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