Reviewing Your Mortgage
Finding a better deal before interest rates go up even more could be essential to your finances.
It is now a vital time to reconsider your mortgage as mortgage lenders are currently in the process of increasing their rates and it is understandably important to commit to a new mortgage rate before this happens.
In recent times, mortgage rates have been particularly low, compared to the past. This is part of the reason why there were so many people looking to move during the pandemic.
The Office for Budget Responsibility has advised that when inflation rises by more than 5%, we are likely to have higher bank rates and more costly mortgages. Inflation is expected to reach 8% in the Spring of 2022.
What Effect Does Inflation Have on Mortgages?
Inflation should sit at about 2% but if it is higher than that, interest rates are put up as this tends to curb spending. The lower levels of spending then reduce inflation as inflation is based on demand. Unfortunately, that means that it is more expensive to get a mortgage when inflation is high because interest rates rise.
Rates Rising on Fixed Rate Mortgage Deals
Due to the Bank of England base rate going up, mortgage interest rates will also go up. This means that there are less opportunities for good, fixed rate mortgage deals and many previous fixed rate deals will be ending. Those paying a standard variable rate or a reduced deal linked to a standard variable rate, will then be negatively impacted by the increases in rates.
Tracker and Variable Mortgages
Those using a tracker mortgage are likely to see an instant increase on their monthly outgoings because their rate follows interest rates. If you currently have a tracker or variable mortgage, it’s time to review your mortgage and see if there are less expensive mortgage options like a fixed mortgage. In the current financial climate, it looks like interest rates will only be going up for now, so we would advise that you obtain advice on your mortgage as soon as possible. There are some lenders who may be able to lock in low interest rates at the beginning of the application for your new mortgage, so speed is of the essence when interest rates are rising.
Reviewing Your Mortgage
If your mortgage is ending in less than 6 months’ time, we would recommend that you begin looking for a new mortgage deal and what choices you have. There are certain lenders who allow you to apply to them a few months in advance of your current mortgage ending. If you are currently only in the middle of a fixed rate mortgage, then you shouldn’t be too affected by the interest rate increase until the end of your offer.
Transparent Mortgage Services can help make getting a new mortgage a pain-free experience with our Home Mover Mortgage Services. If it’s time to look at your mortgage, we can help. Contact us now to find the most competitive rates and the top deals.
