Is now the right time to fix your mortgage?

With lenders steadily lifting the rates on new home loans, it is looking progressively more likely that the record mortgage rates that we have witnessed over the past two years are swiftly becoming a thing of the past. The UK’s leading independent mortgage broker, Mortgage Advice Bureau, reveals why now may be the time to fix. Whilst the 0.09 per cent increase on a two-year fixed-rate mortgage in April may seem moderately small, it is still evidence of the fastest increase in mortgage rates in a single month since February 2012, according to data released by Moneyfacts.co.uk. Statistics also showed that the average two-year fixed rate increased on 14 of the 20 business days in April, with the five-year fixed rates quickly following suit. “If you applied for a two-year fixed mortgage on the 1st April, you would have been offered an average rate of 3.52 per cent. If you went to apply for the same mortgage at the end of April however, that rate would have increased to 3.61 per cent,” said Oliver Adair from Mortgage Advice Bureau. As a result of rapidly rising house prices and a strong rebound within the economy, mortgage rates are slowly being increased from their record lows, with the anticipation that the Bank of England (BoE) may put the Base Rate up to relieve pressure on the market. Economy experts however are still undecided on when this change will happen, with some predicting a Base Rate increase in 2015. The speculation has led to increased volatility in the money market swap rates, the cost of funding that directly affects fixed rate mortgages. Oliver added: “Nationwide reported house price growth of 10.9% year on year in April, yet BoE governor Mark Carney and the Monetary Policy Committee have still kept the Base Rate at its record low of 0.5%. In turn, bank officials maintain that the economy is still too delicate to begin increasing the rates.” The Mortgage Market Review (MMR), introduced at the end of April, now means that all borrowers looking to take out a mortgage have to go through more thorough checks to ensure that they can afford repayments if an interest rate rise were to occur. Whilst two-year fixed rate mortgages have proved more favourable for borrowers reluctant to take the risk of taking out a tracker mortgage. “As those fixed deals come to an end and with many lenders offering a cheaper alternative with their own variable rates, many borrowers have moved over to a standard variable rate mortgage. A change in the Base Rate is not the only factor affecting the cost of your mortgage, and with economists still debating on when it will increase, seeking help from a professional mortgage broker is an essential step to securing the right deal,” concluded Oliver. For further information please contact Oliver on 07917 146430 or email olivera@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk