Borrowers urged to act now after latest interest rate hold
Mortgage brokers have highlighted the Bank of England’s decision to hold the base rate at 3.75% as a reason for those looking to buy or remortgage to act now.
Sarah Thompson, group financial services director, Mortgage Scout, part of LRG, said: “The window to secure a competitive rate is open now, but there are no guarantees it will stay that way. With energy costs set to rise and global uncertainty still a factor, conditions could shift.
“For anyone due to remortgage in the next six months, the advice is clear: act now. You can lock in a rate today and, should rates improve before your deal completes, you can still move to a better option. But you cannot go back and secure a rate that has already gone,” she said.
No guarantee rate cuts will continue
Ben Allen, managing director of network, The Right Mortgage & Protection Network, said he was encouraged by recent rate cuts from lenders in recent weeks as swap rates have eased, but, like Thompson, said there was no guarantee it would continue.
He said: “This is providing some welcome relief for borrowers and creating opportunities for advisers to help clients secure more competitive deals. There is still no guarantee this trend will continue, particularly given the number of economic and geopolitical risks that remain, but the recent direction of travel has been positive.”
However, the decision on whether buyers should fix or move to trackers remains one dependent on individual circumstances, according to David Hollingworth, associate director at L&C Mortgages.
He said: “Most borrowers have been electing to take the security of a fixed rate, but the last few months have seen growth in the numbers that are gambling on a tracker rate to not only offer an initially lower rate but potentially remain so.
Mark Harris, chief executive of mortgage broker SPF Private Clients, agreed: “Lenders have been trimming their mortgage rates in light of falling Swap rates, which underpin the pricing of fixed-rate mortgages, and we expect this trend to continue. Some clients are leaning towards base-rate trackers, as these are cheaper than their fixed-rate equivalents at least initially, and would require a couple of quarter-point increases in base rate in order for borrowers to be worse off.
“However, what suits one borrower may not suit another: if you can’t afford to be wrong – that is, if interest rates were to rise, you would struggle to pay your mortgage – then a fixed rate makes sense.”
