Since the financial crash, homeowners have been repeatedly warned that mortgage rates are expected to rise, but every time this is a false alarm. So should borrowers really have to worry about the latest warning?
The answer is “yes” – and if you haven’t protected yourself from rising hikes, you must act now. Importantly, rates may rise until November. The first hike is unlikely to exceed 0.25 percentage point and the base rate returns to 0.5 percent. But economists think that when they start wandering, they will come. This means that the base rate may be closer to 2 percent in a few years.
Respond by increasing mortgage rates to increase their profits
There is now no excuse for waiting for the loan rate to be repaired. Follow our guide to get the best mortgage deal!
Usually, talking about an increase in interest rates prompts banks to increase mortgage rates and lower their best offers. But over the past two weeks, many banks have reduced fixed-rate mortgages. Some even reduced their fees by half.
So what’s going on? In an accidental bit of time for mortgage borrowers, the conversation about raising interest rates coincided with the end of the financial year for banks. Many are at risk of missing their credit goals – so they desperately want to get mortgage customers. This means that they must offer the highest rates, which has led to cuts.
Why are banks competing to register customers?
However, it is unlikely that these offers will be available for more than a few weeks, so you will have to decide quickly. The long-term repair can save the situation. The two-year offers are suitable for people who are planning to move home soon, and therefore do not want to close long contracts. But experts warn that if rates rise as expected in the next two years, you may have to pay a lot more for your mortgage.
Five-year contracts are not more expensive than two years – and you have peace of mind knowing that your monthly repayments will remain unchanged for the next half-decade.