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Securing a Fixed Rate Mortgage While They Are Low (ish)?

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Securing a fixed rate mortgage while they are low

With spiraling inflation, there is trepidation that interest rates could rise, leaving homeowners with unaffordable repayments unless they act soon.

The Bank of England increased the bank base rate last month to 0.25%, with further rises expected assuming inflation remains high.

Due to increasing rates, borrowers tend to look for long term stability, and five year fixed rates prove to be the most popular choice for our clients.

Lenders have been prepared for this base rate increase. Fixed rates have already been priced with these increases in mind by lenders. In October, you would have secured a five year fixed rate at 0.98%, but today (12th January 2022), the cheapest is 1.41% (both with a 40% deposit).

It is not all doom and gloom. There is good news for first-time buyers and those with 5% deposits as mortgage rates are below 3% for a five year fixed rate. More lenders willing to lend to those with lower deposits have created competition in the market, meaning that mortgage rates for these buyers have been reduced!

So, if you are reading this as a homeowner who is tied into a mortgage and concerned about what rates will look like when your existing fixed-rate expires, then there could be the following three options;

  1. If your rate is due to expire within 6-months, you can lock into a rate now in readiness for the expiry of your existing rate – speak to us for the best rates based on your circumstances?
  2. Pay a redemption penalty and lock into a new rate now – be careful with this option and take Independent advice before going ahead as it could be a false economy.
  3. Sit it out and wait to see what rates are like once you get closer to your existing rate expiry date. You never know!

The truth is, no one knows what mortgage rates will look like in a few years as there are many considerations, and things change quickly. Our advice process is based on each client’s risk and financial standing.

If you are looking for a fee-free independent mortgage broker, please connect with us via:

Conran Mortgages

0800 689 3173

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