Mortgage Borrowers Urged to Act Fast to Avoid Rates Hike

Interest rates tumbled to a historic low during the coronavirus pandemic but were unlikely to stay that way forever. With the Bank of England hinting that a rate rise is likely in the “coming months,” mortgage borrowers are being urged to act fast to avoid being stung by an interest hike.

Lenders had already started to raise rates in anticipation of a base rate shift, with Barclays, HSBC, NatWest, and TSB doing so right after Chancellor Rishi Sunak’s latest Budget speech, but those with tracker mortgages will feel the pinch immediately.

The interest rates available for new and existing customers are already showing signs of creeping up. According to The Telegraph, they’ve spiked by around one-third over the last week alone and are expected to continue to climb in line with the Bank of England’s base rate.

With this in mind, experts are advising new mortgage applicants and homeowners in the market for a remortgage to act now and start their applications while rates are still relatively low.

Ashley Thomas, director at London-based mortgage brokerage Magni Finance said: “The main trend we’re seeing at the moment is that rates are increasing. They have all been going up over the last two weeks and are likely to increase further over the next few months.

“If you want to secure a fixed-rate mortgage, it is best to go for it now while you can. Whilst there are still some rates below 1% per annum, I doubt there will be in three-to-six months.”

Online Mortgage Advisor’s managing director, Pete Mugleston, also believes that now is the time to act for anyone concerned about the impending rise in rates.

“Borrowers on tracker mortgages and standard variable rate agreements are likely to see significant savings by entering a new fixed-rate mortgage while rates are still low,” he said. “If you’re worried about the impact of the Bank of England’s base rates increase, the best thing you can do is speak to a mortgage broker today and get the ball rolling on your application.”

The Bank of England’s potential base rate increase—which was hinted at on Thursday, November 4th—is tipped to be one of several, with finance experts forecasting that the base rate could reach at least 1% by the end of next year.