Mortgage borrowers have faced base rate increase warnings since November last year. Nevertheless, it is important to remain aware of changing rates whilst being cautious when searching for a loan. Mortgage rates have hit record lows over the last few years. As a result, it is no surprise that they would edge up after the base rate raise. However, mortgage providers have chosen to keep their fixed rates generally static since November 2017.
Since this time, the five-year fixed mortgage rate has only increased by 0.05%. A slight increase of 0.10% was witnessed in expectation of the base rate rise. Predictions for the upcoming months indicate that such a small increase could be due to another hike in the base rate occurring in May.
Despite a base rate increase happening just a few months ago, the mortgage market has managed to stabilise relatively quickly. Nonetheless, 22 individual lenders have increased rates since February 2018; some have done so more than once. This suggests that the mortgage market could be changing, especially as SWAP rates are staring to rise again. SWAP rates are what banks use to price their fixed rate mortgages. Such a change suggests that there could be renewed mortgage rate activity. The fixed rate market is finally showing signs of movement. In contrast, Standard Variable Rates (SVRs) have continued to move. To date, SVRs have experienced the biggest increase from 4.60% in November 2017 to 4.76%.
If the base rate increases by another 0.25%, monthly repayments will increase by £35 in just six months. This is based on the average SVR on a £150,000 repayment mortgage over a 25-year term. Consequently, those who are already on a SVR should consider moving away before further increases happen. Instead, borrowers should seek out a fixed rate option and do so soon, so that they can get the best possible deal.
