The Bank of England is expected to hold the base rate at 3.75% when it announces its decision at noon today. But even if it does, mortgage experts are warning borrowers not to relax. As your local property experts, here is what a hold might actually mean for anyone with a mortgage or remortgage on the horizon.
David Hollingworth, associate director at L&C Mortgages, says market forecasts increasingly point towards another hold, but warns against reading too much into it. Lower than expected inflation last month may give the Bank some room to hold, bolstered by a fall in oil prices after the pause in military action. But that data looks backwards, while financial markets are more focused on what could be coming next. A base rate hold should not be taken as a signal of cheaper or steadier mortgage rates ahead.
Fixed rate deals are already telling a different story. Halifax, Coventry Building Society and TSB are among the lenders to raise rates this week. The average two-year remortgage rate has risen from 4.53% to 4.75%, while the five-year average is up from 4.58% to 4.83%. On a £200k, 25-year repayment mortgage, that works out at roughly £25 more a month on a two-year deal and almost £29 more on a five-year one.
Hollingworth points to the resumption of hostilities in the Middle East as the trigger, having put paid to hopes that rates would keep falling through the summer. His advice for borrowers weighing up their options is to lock in a rate now to avoid further rises, with the option to review again closer to completion if the market improves.
At Drivers & Norris, we will be watching today’s announcement closely. If your fixed deal is coming to an end, get in touch and we can point you towards the right advice at the right time.
Source: Estate Agent Today
— Drivers & Norris