Over the past few days, a few mortgage lenders have increased the rates on some of their fixed-rate products.
This comes after several months where mortgage rates had gradually been moving down, so the change may have caught some borrowers by surprise.
The reason for this shift isn’t anything that has happened within the UK housing market itself. Instead, it’s being driven by events in the wider global economy.
Recent tensions in the Middle East have caused increased volatility in financial markets. In response, investors have pushed up the cost of government borrowing and this has fed through into higher swap rates — the wholesale interest rates that lenders use to price fixed-rate mortgages.
When swap rates rise, lenders’ funding costs increase, and this often leads to mortgage products being repriced. Over the last couple of days, we’ve seen a number of lenders withdraw deals and relaunch them at slightly higher rates.
What This Means for Borrowers
It’s important to keep this in perspective.
These movements don’t necessarily mean the Bank of England is about to increase its base rate again. Mortgage pricing tends to react quickly to market expectations around inflation and global events, and those expectations can change rapidly.
Markets rarely move in a straight line, and periods of volatility are quite normal.
If Your Mortgage Deal Is Ending Soon
If your current mortgage deal is due to end within the next six months, it can often make sense to start reviewing your options now.
Most lenders allow you to secure a new mortgage rate up to six months before your current deal finishes. That means you can lock in a rate today even though the new mortgage won’t start until later in the year.
This can provide a useful level of protection. If rates were to continue rising, you already have a deal secured.
At the same time, if rates were to improve again before your new mortgage completes, it is often possible to switch to a better deal before completion, meaning you can still benefit from any improvements in the market.
For many homeowners, securing a rate early simply provides peace of mind and removes the uncertainty of waiting until the last minute.
If you’re worried about how this might affect you, contact Barlow Irvin Financial Services‘ team of award-winning mortgage experts on 01204 208 001.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.