Recent reports in the media indicate that the recent sell-off of government bonds (or gilts) could keep mortgage rates higher for longer.
Mortgage rates had been predicted to go down this year as many believed the Bank of England would cut interest rates. Instead, economists now forecast that the cost of borrowing will remain high for some time to come due to persistent inflation and heavy public expenditure.
This change has also caused swap rates, the rates at which banks lend to each other, to rise sharply. Swap rates are typically used by lenders to set prices for their mortgage products.
Most UK homeowners fix their mortgage rate for two or five years. New research suggests that higher interest rates will add around £1.27bn to annual housing costs for property owners remortgaging in 2025.
If you, a loved one, or someone you know, has been waiting to see if interest rates will fall before checking new mortgage deals, please act sooner rather than later. It is still possible to lock in mortgage deals up to four months before you need to (this has come down from six months as lenders are concerned by future changes). Getting a clear idea of your options ahead of time can help to save costs.
In November, the Bank of England said that the typical houseowner coming to the end of a fixed-rate deal in the next two years, would face a 22 per cent rise on monthly payments.
The good news is that of the 1 million fixed-rate deals ending this year, around a third will save money by remortgaging after their two-year fix expires.
Please get in touch with Beulah Antonin of Charterhouse Mortgages & Protection* for expert advice on your own property loans – whether that is to move, buy a second home or help out children.
Beulah can be contacted on beulah@chmap.co.uk or 020 3838 1101.
*Charterhouse Mortgages & Protection is a trading style of Medical Family Finance.
