Fixed rate mortgage warning for borrowers - Mortgages - News | moneyfacts.co.uk

News

Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Fixed rate mortgage warning for borrowers

Fixed rate mortgage warning for borrowers

Category: Mortgages

Updated: 08/02/2011
First Published: 08/02/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Mortgage borrowers who have been considering fixing their monthly repayments have been told it might be best to act sooner rather than later after rates hit a six month high.

The latest research from Moneyfacts.co.uk has revealed that average two and five year fixed rates have increased to their highest level since August last year, at 4.49% and 5.45% respectively.

Meanwhile, three year rates are at their highest since last September at 5.05%.

However, the increases have come at the same time that the cost to lenders of raising funding on the swap rate market has soared.

The two-year swap rate has increased by 47% since last November, with lenders believed to be passing on this higher cost of funding to borrowers through the increased mortgage rates.

According to Moneyfacts.co.uk, the majority of mortgage lenders have increased their rates since the start of the year, with some mortgage deals seeing rate rises of more than 0.50%.

On a mortgage of £150,000, a 0.50% increase in the mortgage rate adds £42 per month to a borrower's repayments.

"Borrowers who have delayed the decision to commit to a new deal will now find themselves having to pay higher monthly payments," said Michelle Slade, spokesperson for Moneyfacts.co.uk.

"With no signs of swap rates starting to fall, the likelihood is that mortgage rates will rise further."

However, while the rise in swap rates is a headache for borrowers, it is providing a welcome boost for savers.

With lenders looking to source their mortgage lending activity in-house rather than on the funding markets, Ms Slade said savings rates have been increasing in an attempt to attract higher levels of deposits.

"Recent reports are suggesting that a base rate rise could happen sooner than previously thought," adds Ms Slade.

"Any rise in base rate would push mortgage rates higher, so borrowers looking to fix their repayments should act sooner rather than later."

Find the best mortgage rate - Compare best selling mortgages


Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

 
 
Close