The Monetary Policy Commission’s decision this month to hold the Bank of England base rate at 0.25% was met with surprise by a lot of those in the property industry, who had suspected that rates may have been on the rise this month.
Subsequent to the decision being announced, Mark Carney himself suggested rates will be increasing at some point soon.
He said: “…There may need to be some adjustment of interest rates in the coming months,” adding that “…the probability of a rate hike has definitely increased.”
For over a year since the base rate dropped to its historic low of 0.25% last August, many borrowers whose previous mortgage deals had ended have been sitting on their lender’s Standard Variable Rate, which in many cases was cheaper than their previous deal, and also gave many borrowers the opportunity to move to another product or even lender without any financial penalties.
Mortgage rates are currently low but could that all be about to change
However, as the lending market has in the past months become so competitive, by hanging out for rates to hit rock bottom, and with the interest rate inevitably going to rise at some point, could now finally be the right time for those who haven’t remortgaged their home to do so?
Brian Murphy, Head of Lending for Mortgage Advice Bureau said: “The benefits of taking advantage of the cheap deals around at the moment are very clear.
“The opportunity to fix your mortgage rate for two, five or even ten years at under 2.5% would provide many with a likely significant saving on their current lender’s Standard Variable Rate – the current average lender’s SVR being circa 4.5% – as well as providing the security that their mortgage payments would remain the same regardless of what the interest rate does over the term of their mortgage.”
So why aren’t more people doing it?
There are, in all likelihood, two main reasons.