Fixed Rate Customers Facing Payment Increases When Deals End
Lenders continue to announce the withdrawal of existing deals and launch higher fixed and tracker rates. Since Friday, an additional 240 residential mortgage products have been removed by lenders, as the average interest rate on a two-year fixed mortgage exceeded 6%.
In addition to the current situation, an increase in the base rate is highly anticipated during this week's Bank of England's monetary policy committee meeting. The majority of analysts predict a minimum growth of 0.25 basis points from the existing 4.5% rate.
As the home loan market experiences increasing pressure, numerous mortgage providers are raising the borrowing costs for both new customers and existing clients seeking a new arrangement.
For those on a fixed-rate mortgage - your payments will remain the same until your current deal ends. However, between July and September, over 400,000 individuals will see their fixed packages expire, which is quite a significant number. Many will need to adjust their financial plans to accommodate monthly repayments that are several hundred pounds more expensive than before.
If you're a customer whose fixed-rate product is set to expire within the next six months, it's advised to consult an independent mortgage broker. They can offer guidance on suitable options for your circumstances, including the potential opportunity to secure a deal at this time.
Remortgage offers are usually valid for up to six months. Therefore, if your deal ends in the upcoming months, you can secure a deal now and observe how the situation unfolds. You're not obligated to accept that mortgage offer if the cost decreases. However, if the costs increase, you'll have successfully locked in a lower rate compared to the available offers.
If you possess a tracker or variable mortgage, your monthly payments will likely increase quite promptly. This occurs because tracker mortgages generally correspond with the Bank's interest rate plus a specific percentage. Consequently, when interest rates fluctuate, your payments adjust in the same manner.
Owner and Senior Mortgage Broker at Greenshoots Financial, Donna Kerr, stated: "The market is changing rapidly at the moment, and guidance can vary day by day. It's crucial to consult with a knowledgeable and independent mortgage broker who stays informed about lender updates and can provide the most suitable solution for your situation in this market."
She went on to explain that for those seeking security, a fixed rate is invariably the ideal choice. It could be advantageous to prolong the mortgage term to reduce payments, even though this entails paying more interest over time. This approach might be suitable for certain clients to manage their short-term finances. The crucial factor is to consult with your broker well ahead of time to explore the options at your disposal.
With our comprehensive network of lenders and tailored strategy, we can assist you in discovering mortgage and insurance products that align with your requirements and financial plan - contact us today.