Is now the right time to fix your mortgage rate?

The Bank of England have just announced another rise in the base rate, moving it up from 1% up to 1.25%.

It is the fifth time in quick succession that the rates have been increased – after the initial rise to 0.25% from 0.1% in December last year, they were then upped again to 0.5% in February, 0.75% in April, hitting 1% in May. This is the highest it has been for 13 years.

How does this rise affect you now?
If you are on a Tracker mortgage or have let your mortgage lapse onto your lender’s standard variable rate, there will be implications. This is because the amount you repay each month is linked to the Bank of England’s base rate, so any increase will result in your monthly repayments going up.

Whilst we enjoyed many years of reducing and low interest rates with relative stability a Tracker mortgage was a good option, but now could be the time to consider a fixed rate.

Are the rises set to continue?
Inflation has been rising steadily since April 2021 and we now have the highest inflation rate the UK has seen since March 1992.

And with the current situation with Russia and their invasion of Ukraine, this has caused the price of oil to rise meaning a rise in energy costs – this could cause inflation to grow even higher over the next couple of months.

Many economists now believe that the base rate could continue to rise, reaching 2.5% by mid-2023.

Is now the time to review your mortgage?
The recent world events and the rapid rise in energy prices have shown how quickly situations can escalate, so if you are worried by the uncertainty and need more financial security, then reviewing your mortgage is a good place to start.

Moving your mortgage on to a fixed rate can give you reassurance that your outgoing payments will not increase for the length of the agreement – this could be over 3, 5 or even 10 years.

How far should you plan ahead?
If you are close to the end of your current term – maybe less than 8 months to go – you might want to start searching for a new mortgage deal now as lenders offers are becoming more expensive by the week and you can usually lock in a mortgage offer three to six months ahead of time.

Things to consider
Reviewing your mortgage options and thinking about whether a fixed-rate product could save you money in the long term is advisable in today’s economic climate.

But always read the small print on your current offer – mortgages often have early repayment charges (ERCs) attached to prevent you leaving before your term ends, so make sure to check all the details of your current policy before committing to a decision.

If you’re on a standard variable rate (SVR), you are free to remortgage to a new deal at any time, which is always worth looking into as these terms can be an expensive form of borrowing.

If you’re on a discount mortgage that has gone up, you may be able to remortgage without penalty, but you should always check. You may need to wait for your initial deal term to run out, or pay the charge to leave early – sometimes paying the fee to leave can work out more financially viable than staying on the terms.

Seeking professional advice
If you are unsure as to what the next move should be for you when it comes to your mortgage, or what the best offer would be for you and your circumstances, then talking to a professional mortgage advisor is crucial.

At Mother Goose Mortgages, we have over 20 years of experience and will always give you the expert advice and guidance you need.

As a member of one of the UK’s largest award-winning mortgage networks, we can offer you a comprehensive range of mortgages from across the market, in addition to exclusive mortgages not available from high street banks and building societies.

Talk to us today on 01892 862534 to see how we can help you.