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Are cheap mortgages coming to an end? Where it comes to personal finance, and especially mortgages, if Martin Lewis issues a warning, it’s always worth paying attention. And this time, Martin’s message is very clear: the historic low interest rates that many homeowners have enjoyed may soon be a thing of the past.
Choosing or switching to the right mortgage is one of the most important pieces of property advice for any homeowner, but changes may be afoot that are beyond homeowners’ control. Here’s why.
Image credit: Chris Snook Photography
Why cheap mortgages may be about to end
Writing on the MoneySavingExpert website, Martin draws homeowners’ attention to a recent comment by Andrew Bailey, the Governor of the Bank of England . Bailey said that the rising inflation means that the Bank ‘will have to act’. This, Martin warns, is a very clear indication from the Governor that base interest rates are about to start rising – and with them, mortgage interest rates.
Although Martin acknowledges that the number of available mortgage deals with interest rates under one per cent have increased since the lifting of Covid-related restrictions, the summer levels of such deals may have been ‘as good as it got.’ What levels of increases can homeowners expect? Martin says that ‘the market’s strongly predicting (it’s not always right) rates will rise from today’s 0.1 per cent to 0.25 per cent next month, then to 0.5 per cent by February and 0.75 per cent later next year.’ If these base interest rate increases come to pass, an increase in mortgage rates will be inevitable. Moreover, Martin think that mortgage rate will go up ‘steeply and swiftly’ as soon as base interest rates start climbing.
Image credit: Polly Eltes
What can homeowners do to prepare for the interest rate rise? Martin’s advice is simple and clear: ‘EVERYONE with a mortgage should check now if your existing deal is as good as it can get – and that applies double if you’re languishing on your lender’s standard variable rate.’ A standard variable rate is never a good idea in uncertain times, and while some homeowners will have benefited from years of declining base interest rates, they need to urgently reconsider and see if they can lock in a good fixed-term deal to avoid any nasty surprises.
The post Martin Lewis warns homeowners that cheap mortgages may be coming to an end appeared first on Ideal Home.
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