01st July 2022

Get your Mortgage Now…..

Mortgage Rates:

Mortgage rates are rising as the cost of money increases, driven by increases to the Bank of England base rate. Give us a call or send an email when you decide to move or buy for the first time, and we’ll help you get sorted with your mortgage.

Read On:

While tracker mortgage rate and SVRs tend to move in line with the base rate, lenders have more control about how they price their fixed rate loans, based on how much funding they have pre-secured at certain rates, and how competitive they want to be in the market. So the rise in the cost of fixed-rate mortgages is less linear.

Even so, buyers are now facing average rates of 3.37% for a 5-year fixed-rate loan, according to Moneyfacts, compared to 2.64% in December. This increases the annual cost of a loan for an average priced home (£250,000) with a 25% deposit and 25-year term by £870. If interest rates continue to rise, the costs of paying for a mortgage will also continue to climb, meaning that for those looking to move home, taking action sooner rather than later will be beneficial.

The stress-testing rules for mortgages introduced since the global financial crisis means that many existing homeowners have proved their income can withstand rising interest rates. This signals limited numbers of forced sales, which have a negative impact on pricing. The recent announcement that stress testing rules will be adjusted for borrowers, so they no longer have to prove they can afford repayments at the Standard Variable Rate +3%, will mean a some additional borrowers, especially first-time buyers, will be able to access loans, but it will not make a significant change to lending levels.

The general rule for lending to be limited to 4.5 times income remains. The majority of homeowners are also locked into a fixed-rate mortgage, meaning they are protected from current interest rate moves. There is also a buoyant employment market, helping offset the more challenging inflation environment for now.

Thinking About Moving? Think Target – Affordably Priced, Honest Advice.