On 22nd September, in a bid to help kerb rapidly rising inflation, the Bank of England (BOE) raised the base rate from 1.75% to 2.25%, a move that was anticipated as it is usually the method the BoE employs to battle inflation.
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.
In the face of the annual inflation rate hitting 9.9% — close to the highest it’s been for four decades — the Monetary Policy Committee (MPC) did as they were expected to do and raised interest rates. According to the BoE’s predictions, inflation could rise to 11% by October. As a result, there are even more rate hikes to be expected before the end of the year and into the new year.
Experts are predicting that the BoE will raise rates above 3.5% by the end of 2022 and that by next summer, rates could be as high as 4.75! What that means for mortgage interest rates is that the best fixed rate on a 2-year deal would jump to 6%. So, what does that mean for borrowers?
Should you fix your mortgage now?
It’s tough to be in the market for a new home right now, but if you have been considering moving or your introductory term on your current mortgage is nearing the end, it would be wise to act now.
With no indication of inflation slowing down, more rate hikes are inevitable. Even waiting a few months to act could end up costing you thousands of pounds over the course of your loan. Waiting until next year could mean contending with a BoE base rate of 5%.
Even if you currently have a fixed-rate mortgage, if you are close to the end of the period (around 6 months from the end date) it’s possible for you to search now and lock in a rate for you to switch over to when the time comes. This will help you avoid early termination fees and set you up with a reasonable rate before your current deal is over.
In the past, mortgage providers quickly adapted to rising rates and adjusted their product offerings accordingly, so if you want to take advantage of fixed-rate deals with rates as low as they can be, you should act now. After the BoE raised rates this month, over 500 deals were pulled by lenders, so rate hikes are already impacting the market.
Your next steps to securing a fixed rate mortgage
The experts at Dental & Medical Financial Services are here to help you find the right mortgage for you. For help from beginning to end of the mortgage process, don’t hesitate to reach out. Use our Mortgage Quote Tool to help you find a mortgage that suits your requirements. Then get in contact with us to give you our suggestions and take care of all the necessary paperwork.