As banks continue to hike up their lending rates, fixed mortgages are once again climbing for the ninth month in a row as borrowers are shying away from more risky loans such as variable mortgages. In fact, borrowers who wait until next month to secure their final mortgage loan may find that rates will increase by an additional half a percent which may seem small, but is in fact means an additional £35 a month for the average £150,000 home.
As most budgets are now stretched, these small increases can make a large difference over the course of the year and is one of the reasons that analysts are predicting the average household will have thousands of pounds less disposable income this year.
The only thing keeping buy to let mortgage rates within reason is the fact that the Bank of England base rate has remained at a low of just 0.5% over the past two years, but as inflation continues to increase most economists predict that the base rate is going to rise over the next few months leaving very little room for those with variable mortgages to attempt to keep up.
This is also a reason for the increase in fixed mortgages as those with variable mortgages are switching their mortgage interest types of they have the credit history in an effort to avoid the hike before it happens.
Swap rates also predict that the base rate of the Bank of England is set to increase as the dictating rates for fixed mortgages have risen up to 1.88% for two year fixed mortgages over 1.77% at the close of January and up to 2.99% for five year mortgages compared to 2.94% back in January. Once again, while the percentage changes may seem quite small, as mentioned above every half percent increase is a large chunk of change when placed in front of a tight budget.
The news looks poor for almost every homeowner as last week large banks Skipton BS, Principality BS, Abbey, and Clydesdale Bank all increased their mortgage rates and most other banks are predicted to soon follow suit. For this reason borrowers that want a secure interest rate are advised to act quickly so that they get locked in to a reasonable rate before the interest rates jump again.