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Is it Time to Act Before Mortgage Prices Rise?

The UK has been enjoying over a decade of low-interest rates since they were slashed during the financial crisis. What was meant to be a temporary measure has lasted 13 years due to the economic slowdown that occurred shortly after. But with inflation on the rise, along with rates on bonds, and general worry from economists about growth, it might be time to lock down a long-term mortgage rate before those increase as well.


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.


The Bank of England (BoE) base rate remained at 0.5% for seven years until it fell to a record low of 0.01% amidst the coronavirus pandemic in 2020. The low rates went hand-in-hand with the bank infusing £900 billion into the economy in order to encourage activity under a quantitative easing programme.


Rates on the rise

Especially in the last year or so, borrowers have had a wide selection of low-rate two-year and five-year fixed mortgage deals all under 1%.

But over this summer, inflation overtook the BoE base rate target of 2%, hitting 2.5%, with many expecting that to eventually hit 4% before the end of the year. Consequently, the BoE is considering raising the base rate before 2022 to keep the figures in line with each other.

Since the base rate affects the rate at which lenders can borrow and lend money (aka the swap rate), usually when the base rate rises, so does the swap rate. And with higher rates, the number of cheaper mortgages will dwindle.

With many agreeing that an interest rate rise is imminent in the coming months, and the quantitative easing programme nearing an end, mortgage interest rates are sure to follow the base rate on its rise.


Lock in your rate now

If you are already locked into a fixed low-rate mortgage deal, then you have no need to worry about rate fluctuations. However, if your current mortgage deal is coming to an end soon and you have been considering a new deal, the time to act is now. If you are on a variable rate deal or a tracker mortgage, any changes will affect your budget each month.

You can start looking for new deals up to six months before your current one ends, so if the end of your initial deal is on the horizon, you have the opportunity to take advantage of these low rates before they are expected to go up in the new year.



Traditionally, most borrowers go with two and five-year fixed deals, but as the future of interest rates is so unknown, but unlikely to get lower than they are currently, many are looking toward ten-year deals to lock in their rate for as long as possible.


For most people, their mortgage is the highest recurring monthly cost, so it makes sense to take whatever steps necessary to secure a deal that keeps that expense low. 


Get started

The experts at Dental & Medical Financial Services will help you get ready for the mortgage and home buying process from start to finish thanks to our years of knowledge and experience in securing mortgages for dental and medical professionals. So, don’t hesitate to contact us when you’re ready to embark on your house hunt.


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Dental & Medical Financial Services have been helping doctors and dentists with finding low-cost mortgages for your home and investment properties for over 25 years.

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