By Mark Harris, chief executive of mortgage broker SPF Private Clients
The Bank of England’s decision to hold base rate at 5.25 per cent for the second consecutive meeting was widely expected by the markets. It looks as though efforts to bring inflation under control are working, although Bank of England governor Andrew Bailey did not rule out further rate increases if needed and warned that it was ‘much too early to be thinking about rate cuts.’
Hard-pressed borrowers worried about affordability will welcome the news as they have seen significant increases in mortgage costs in recent months. Before the pause in rate increases at the Monetary Policy Committee’s September meeting, there were 14 consecutive hikes, taking base rate from 0.1 per cent in December 2001 to 5.25 per cent today.
So, what next for borrowers? Fixed-rate mortgages are influenced by future base-rate movements and therefore not directly linked to what is decided this week. Many lenders have reduced their fixed rates in the past few weeks on the back of calmer Swaps, which underpin the pricing of fixed-rate mortgages. While the days of rock-bottom mortgage rates are long gone, and we all have to get used to paying more for our mortgages, we expect pricing to improve further in coming weeks.
Property portal Rightmove reports that the average mortgage rate for a five-year fix is 5.48 per cent (at 85 per cent loan-to-value), down from 6.24 per cent a year ago. However, while rates are clearly moving in the right direction, this is an average rate and cheaper deals are available, depending on your loan-to-value and other factors.
Borrowers who are due to remortgage in the next few months will still face a payment shock, so it is important to plan ahead as much as possible, take advice and act now. Mortgage products can be booked up to six months before you need them, so it is worth speaking to a whole-of-market broker, such as SPF Private Clients, to find out what’s available. This will give you peace of mind and then when you come to remortgage, if rates are cheaper, you can opt for another deal.
SPF Private Clients who are part of Howden, offer a whole of market mortgage broking service.
SPF was established in 1997 and arranges £3.5BN of mortgages each year with over 140 different lenders. With access to exclusive rates and products SPF are able to assist in the following areas.
- Purchase or Remortgage
- Bridging Loans
- Development Finance
- Commercial Mortgages
- International Mortgages
- Equity Release
This is a marketing article by SPF Mortgages.