With news this month that inflation is finally starting to come down, official figures suggest that this dropped from 10.1% to 8.7% last month. However, the figure was not quite what it seemed. Behind the headline rate, the core inflation rate which removes energy and food prices is still rising. Yet another Bank of England base rate increase has bought the base rate up to 4.5%. As a result, mortgage providers are starting to be concerned. Let’s take a look at why you should speak to a mortgage broker when you are asking yourself “Should I fix my mortgage interest rate?”
Fixed mortgage interest rates
Fixed mortgage deals usually move in line with any predicted changes to future interest rates. Lenders will consider current rates as well as the longer-term forecast. Up until last month, these fixed-rate mortgage deals had been falling. But this month rights have started to increase again. Last month the cheapest rates were 4.08% for a two-year fixed and 3.79% for a five-year fixed. However, the cheapest rates are now 4.39% and 4.05% respectively. And some people are predicting further rate rises. Some experts believe that the Bank of England Base rate may peak at 5.5% in the next 12 months.
Coming to the end of a fixed rate mortgage deal
It’s estimated that more than 1.5 million mortgage deals are set to end during the remainder of this year. Many of these deals were taken out when rates were as low or lower than 2%. So, with this big increase in the rates that are now available, we will see many of these customers paying a lot more for their monthly mortgage. You can check how much you’re likely to pay by using our mortgage calculator. This increase in monthly payment, along with the other increases we’ve seen recently, to things like energy bills and food costs, may see many people struggle.
Lock in a fixed interest rate mortgage deal now
If you’re on a variable-rate mortgage or your current mortgage deal is ending in the next six months it’s worth checking if you can lock in a new deal now. Acting now will insure you against any future rate rises. Most lenders will let you secure a new deal between three and six months in advance. So now is the time to be looking at what’s available. If you decide to lock in today’s rate as an insurance policy against further rate rises, you can continue with your current deal until it ends at which point the rate that you’ve locked in will begin.
What if mortgage interest rates come down?
Some people believe the recent rate increases may be short-term and are just a snap reaction from mortgage lenders. If you do lock in a rate now and a better deal becomes available, in most cases you can move onto the better rate. This can be more complex if the product you select comes with a fee which you may have already paid. But not all products come with a fee, so speaking with an expert can help you understand the pros and cons of locking in a deal. And if you’re moving providers you may have to pay other fees for example legal fees or valuation fees. Again, some products come with free legal and all valuation fees. Any fees that you pay in advance are a little like an insurance policy against any further rate increases. Working with a mortgage broker will help you understand the different options available. And if you choose to work with us at least you’re guaranteed not to pay any broker fees.
Tracker rate mortgages
If you’re on a tracker right mortgage now may be a good time to think about fixing. You need to think about if you can afford any further increases to rates. Some predictions suggest that the base rate may hit a peak of 5.5% which will mean further increases to your monthly payments. If you fix your mortgage interest rate now, it allows you to know exactly how much your payments will be for the length of your mortgage deal and ensure that you’re not affected by further base rate increases.
Staying with your current provider
We know that for some people their priority is to keep things as simple and hassle-free as possible. This can mean that they want to stay with their current mortgage provider, which may be your bank, to avoid any additional paperwork and inconvenience. Working with a mortgage broker will always reduce the inconvenience and stress when it comes to re-mortgaging. But if this is still too much for you, staying with your current lender is often quick and simple. In these circumstances, it’s still worthwhile speaking to a mortgage broker as some banks have products that are only available to brokers. The broker can also keep an eye on any further changes to the rates and products available after you’ve chosen your product. And who knows the potential savings that could be achieved by moving lenders may be enough to persuade you to switch providers.
Help and support to fix your mortgage interest rate
Working with a mortgage broker will ensure you have a full view of all your options. They have the knowledge and understanding of how much lenders are willing to borrow based on your income. So, they can quickly advise you on how much you could borrow. And if your income isn’t as simple as a paid monthly salary, for example you’re self-employed, a mortgage broker can definitely help. A mortgage broker will also ensure that your re-mortgage date doesn’t incur any early repayment charges. They’ll also ensure that the amount you borrow will be enough to clear your old mortgage so that you don’t end up with a shortfall.
Here at 177 mortgages our team of experts can help whatever your situation. From a simple product transfer with your existing lender to a re-mortgage with a new provider. We will ensure that we find all of the options available to you. So that you can make the best choice when asking if yourself if you should fix your mortgage interest rate. And remember, all of our help, support, and expert advice is fee-free. So get in touch today.