Time to Fix as Lenders Start to Increase Mortgage Rates

by Mark Johnston

There has been fresh calls for homeowners who are looking to fix their mortgage rates to act quickly. Industry insiders are expecting that lenders will start to increase their rates very soon and so the best deals will disappear in the coming weeks and months.

Mortgage brokers are already advising their customers to fix quickly before banks and building societies put their rates up for fixed term mortgages. Already many lenders have started to increase their prices such as the Skipton Building Society and Natwest Bank.

Natwest removed its five year fixed rate mortgage from sale which has a great rate of just 3.75% for a 50% loan to value mortgage. This was replaced by a new deal with a higher rate of 3.95%. Skipton Building Society soon followed suite when it withdrew its entire range on five year mortgages. The range was very competitive especially given that it included a 90% loan to value option.

Leading Mortgage Broker, Nigel Bedford said: “More clients are seriously considering fixed rates, particularly those who are financially aware and have been watching the swap rates increase over recent weeks,”

More and more borrowers are looking to fix their mortgage amongst increasing speculation of interest rate rises. Given the sustained low base rate, lenders have been offering some very good deals to try and tempt borrowers off standard variable rates but this may well change as fix rate mortgage are set in increase.

Many mortgage broker firms are reporting a large increase in customers requesting fixed rate products, Aaron Strutt from Trinity Financial Group said: “For borrowers with at least a 25 per cent deposit, the lowest fixes are not a huge amount higher than the cheapest trackers and this makes them attractive,”

Mr Bedford went on to say: “As yet, very few lenders have significantly increased their fixed rates as they still have money that they bought at the lower swap rates. Barclays Wealth would look to increase its 3.99 per cent five-year fix by around 0.50 per cent when its current tranche runs out. The advice must be for anyone concerned about rising interest rates to secure a good fix soon or they may be disappointed,”

There are still a large number of lenders that haven’t increased their rates yet with some of the larger providers such as First Direct offering excellent deals. Their five year 3.89% mortgage has a loan to value of 65% with a fee of just £99. Barclays also has a 3.99% five year mortgage that only requires a 25% deposit.

Another mortgage broker Melanie Bien  suggested: “You can book a rate up to six months before you actually take it out, depending on the lender, so this may enable you to enjoy a cheap variable rate for a while longer before moving on to the fix,”

The other option is to look at providers who are offering some sort of flexibility. In recent months, lenders have started to offer some interest products that allow much more flexibility than what was offered in the past. Some allow borrowers to make unlimited over payments whilst others will split a mortgage between different rates and different terms.

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