In the past few days, many lenders have raised the price of fixed-rate mortgages.
After banks raised their interest rates by three times in a week, homeowners now have to fight for a mortgage at a low rate.
The cheapest mortgage interest rate has risen significantly as lenders expect the Bank of England to announce an increase in interest rates on Thursday.
Millions of tracker mortgage borrowers will experience an immediate increase in their monthly payments if there is a rise in the Bank Rate. However, lenders have begun to pass higher costs on to new customers.
A borrower who had a 20% deposit could get a 2-year fixed-rate loan at 1.24pc. However, this rate has risen to 1.64pc last week, almost a third more.
First-time buyers also suffered. According to Defaqto (a data analyst), the average rate for a borrower who has a 5pc deposit on a 2-year fixed mortgage was 2.45pc last week. The Bank’s eagerly awaited rate decision is two days away, and it currently sits at 2.69pc.
Experts predict that the Bank of England will make the first of a series of rate increases.
Platform, a part of the Co-operative Bank will increase its rates on some of its mortgages tomorrow up to 0.44 per cent.
It comes after a stream of changes by lenders last Wednesday, including rate increases by four of the country’s largest lenders, Barclays (HSBC), NatWest, and TSB just hours before the Chancellor’s budget.
Katie Brain of Defaqto stated: “We have enjoyed long-term record low-interest rates and they had to begin going up at some point.”
Experts predict that sub-1pc mortgages won’t be available on the market for the foreseeable future. These low-interest rates, which were introduced to the market in April to great fanfare, have been withdrawn from the market.
According to Moneyfacts data, the number of sub-1pc fixed-rate mortgages has dropped by more than 70% in less than one month, from 131 down to 35.
Swap rates are what determine the price of fixed-rate mortgages. They have risen in recent months, and customers are now paying more.
The two-year swap rate was 0.49pc at the beginning of September, and 0.72pc at the end. These rates had risen to 1.21pc & 1.26pc by the end of last Week.
Brokers advised borrowers who are about to lose their standard variable rate mortgages to switch to better rates as soon as they can. These deals are often more costly than fixed-rate mortgages.
Recent research by Experian and L&C Mortgages (a broker) found that borrowers with standard variable rates could save more than £5,000 annually by switching to a fixed rate, two-year deal.
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