November 2017 saw the Bank of England raise interest rates for the first time in a decade, from 0.25 per cent to 0.5 per cent, causing a number of lenders to increase their mortgage rates.
The Bank of England has indicated there could be further rate rises, so if you’re on a Standard Variable Rate (SVR) or Tracker mortgage you might start to question whether now is the right time to fix your mortgage rate.
When will interest rates go up?
With the UK experiencing high inflation but weak economic growth, opinions are split on how the Bank of England will react, making it very difficult to predict when interest rates might rise.
Should I consider moving to a fixed rate mortgage?
The attraction with a fixed rate mortgage is the certainty it gives to your monthly mortgage repayments over a set period. This is useful if you’re on a budget because it gives you peace of mind that if the interest rate goes up, your repayments will stay the same for the period of the fixed rate.
Whatever type of deal you’re on, it’s a good idea to take any increase in the base rate as an opportunity to review your current mortgage, particularly as lenders will be launching deals to entice new, and retain existing, customers. As the base rate and mortgage rate are often closely linked, many experts believe now is an ideal time to get a new deal, especially if you’re currently on a high SVR.
If you are considering changing your mortgage deal, make sure you’re clear on any fees and charges that may be due when remortgaging, as these can reduce any potential savings made. Some lenders have exit fees and early repayment charges as high as 5 per cent, so if you’re coming to the end of your term, check that you’re not switching out during the penalty period.
When looking for a new mortgage deal, it’s sensible to start reviewing your options between three and six months before your mortgage deal is due to end.
If you’re not sure whether moving to a fixed rate is right for you, please get in touch.