It may seem like we've been warning mortgage borrowers about rate increases since before the base rate rise in November, but that doesn't mean they should stop being vigilant. With mortgage rates hitting record lows in the last few years, it was inevitable that they would edge up following a base rate rise – fixed rates even rose in anticipation of it. However, what may come as a surprise three months on is that providers have opted to keep their fixed rates mostly static since November.
Figures uncovered by our finance expert Charlotte Nelson reveal that the five-year fixed mortgage rate has only increased 0.05% since November, with only a small increase of 0.10% witnessed in anticipation of the base rate rise, well below the hike of 0.25%. Charlotte suggests that this is largely due to the predictions of another increase in base rate occurring in May.
"With a rate increase just a few months ago, many would have assumed that the market would be still reeling from its effects," said Charlotte. "However, it seems that due to the inevitably of the rise itself, the mortgage market has stabilised relatively quickly."
Despite this overall stability, the data shows that 22 individual lenders have increased rates since the beginning of February, some more than once. This suggests that the tide is starting to turn, especially as SWAP rates (which banks use to price their fixed rate mortgages) are starting to rise again.
"This is a similar scenario to before the last rate rise," Charlotte pointed out, "with providers once again starting to factor SWAP rates into their pricing." Together with an increased LIBOR rate, this suggests not only a base rate rise, but also renewed mortgage rate activity.
While the fixed market is just starting to see some movement again, Standard Variable Rates (SVRs) haven't stopped moving. They've experienced by far the biggest increase lately, up from 4.60% in November to 4.76% today. Although this is still shy of the full 0.25% increase, it means that those on their lenders' SVR should consider making a move sooner rather than later.
Charlotte has calculated that another 0.25% base rate rise could see monthly repayments increase by £35 (based on the average SVR on a £150,000 borrowing amount over a repayment-only 25-year term) in just six months.
She concludes: "The only way from here appears to be up, so borrowers who are sitting on their SVR, or coming to the end of their deal, would be wise to look for a fixed rate. It is important that they act fast to ensure they get the best possible deal."
Remortgaging to a top fixed rate mortgage deal could help borrowers secure their repayments through what will likely be a tumultuous time for the mortgage market. If you'd still prefer a variable rate mortgage instead, make sure it's a competitive one.
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.