Borrowers expecting mortgage rates to drop have hopes dashed – BBC News
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Borrowers expecting mortgage rates to drop have hopes dashed
Image source:
Getty Images
By Kevin Peachey
Cost of living correspondent
Published 17 minutes ago
Nearly all the major mortgage lenders in the UK have announced increases in the cost of home loans in recent days. Analysts are uncertain over whether there are more to come, but urge people who need to find a new deal to act now.
Someone whose five-year deal is coming to an end faces paying more than £5,000 more a year on their next deal under a typical rate, if they borrow the same amount of money. Many lenders allow people to lock in a new deal six months before their current one comes to an end, with an opportunity to switch if costs come down before it kicks in.
"Borrowers expecting mortgage rates to drop in the coming weeks have had their hopes dashed," said Rachel Springall, from financial information service Moneyfacts. "It is still essential borrowers do not delay seeking advice to navigate the mortgage maze."
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For borrowers, the interest rate on a fixed mortgage does not change until it expires, usually after two or five years, and a new one is chosen to replace it. The vast majority of homeowners and buyers have this kind of mortgage.
Since the Iran war began, global economic uncertainty has pushed up the cost of deals. Someone on a typical two-year deal, borrowing £250,000, is likely to pay £120 more a month in mortgage repayments than they would have had they secured the deal at the start of March when the US-Israeli strikes began.
More recently, UK government borrowing costs have been rising, which has a knock-on impact on mortgage rates. That pressure has been maintained in the latest sale of debt by the UK on Tuesday.
The governor of the Bank of England, Andrew Bailey, is expected to be asked about this bond market upheaval when he is questioned by the Treasury Committee of MPs.
