Mortgages in times of rising rates
With inflation expected to remain above the Bank of England’s (BoE’s) target deep into 2023, interest rates are forecast to rise further still. What can mortgage holders expect with their mortgages in times of rising rates?
Up and down
The effect rising rates have on you depends on your mortgage type. Those with a tracker mortgage will have already seen their rate increase directly in relation to Bank Rate, meaning costlier repayments as soon as the BoE makes a change. Standard variable rates (SVRs) also rise (or fall) in response to the BoE’s decisions. But SVRs can change at any time because they are set by the lender rather than simply tracking Bank Rate.
Shielded – for now
Fixed rate mortgages, on the other hand, are protected – for now. If you are on a fixed rate, that means you won’t see any changes in your mortgage until your current deal ends. At the end of your fixed-rate deal, you will automatically be switched to your lender’s SVR or a reversionary rate, which could prove expensive. So, it’s a good idea to consider your options well before the end of your fixed term.
Should I remortgage now?
If you’re in the last six months of your current mortgage deal, it might be worth locking into a fixed rate mortgage now. By locking into a mortgage deal before your current one expires you can avoid rolling onto your lender’s default rate. You will then know what to expect with mortgages in times of rising rates and plan your finances. However there may be a penalty for leaving your current deal early.
We can help find the most suitable option for your unique circumstances.
We don’t just deal with the ‘high street’ lenders – we offer a home and buy to let mortgages review service that is representative of the whole of the market. We can source funding from smaller, niche lenders and the newer challenger banks. We can help with equity release loans and find more competitive refinance re-mortgage rates.
Take a look at our Guide to Mortgages and Protection to get a feel for our service and how it will make your life, your mortgage loan and your move, easier for you.