Homeowners with fixed-rate mortgages face significant increases in their monthly payments when they come to remortgage, as average rates on both two- and five-year deals are now 4 percent higher.
The two-year flat rate average is now 4.24 percent, the highest rate since January 2013.
This means that those currently looking to re-mortgage at the end of a two-year deal – who were set in September 2020 when rates were around 2.24 per cent – can expect to increase their monthly payments by more than £200.
Rising rates: The Bank of England’s base rate has increased since December 2021, driving up the cost of money for borrowers.
This is based on an estate worth £286,000, which is the current average in the UK.
Those with fixed rates for five years about to expire now face an average rate payment of 4.33 percent, the highest rate since November 2012.
Borrowers who set the mortgage rate five years ago at around 2.77 per cent would see their monthly payments increase by £180 for a property of similar value, according to Hub Financial Services figures.
Typical rates have increased for eleven consecutive months, according to analysts at MoneyFacts, and the number of mortgage products on the market has decreased.
Homeowners who move to standard variable rate mortgages at the end of the fixed term will see their payments skyrocket.
The typical SVR is now 5.40 percent, up from 4.44 percent in September 2020.
According to Moneyfacts, a borrower with a £200,000 25-year mortgage that forgoes a typical two-year fix to the usual SVR could see their payments rise by £344.
SVR borrowers are also not protected from a hike in interest rates.
>> Browse the latest rates with This is Money and L&C’s Mortgage Finder
The Bank of England has been steadily increasing its base rate since December 2021 when it stood at 0.1%.
It is currently at 1.75 percent, with a further increase to 2.25 percent expected when the Monetary Policy Committee meets next week.
Analysis from MoneyFacts shows the rapid rise in fixed-rate mortgage rates, which are expected to rise further before the end of the year.
‘Extremely low rates over the past decade have led people to borrow to the extreme, assuming that default rates will remain low,’ said Graham Cox, director of SelfEmployedMortgageHub.com.
This is no longer the case. Unfortunately, we could see a lot of distress selling over the next year or two, driving down real estate prices.
And while mortgage rates have gone up, product selection for borrowers has gone down. The number of products available to homeowners decreased by 517 over the past month to leave just 3,890 on offer for the month of September, the lowest number in more than a year.
That’s 1,425 less than what was available at the beginning of December 2021 (5,315) before the first of the recent base rate increases. The number of products offered across all loan levels decreased to value, the first time this has happened since April 2020.
Eleanor Williams, financial expert at Moneyfacts, said: ‘The average product shelf life rose to 28 days in September, up from a record low of 17 days last month, but instead this points to a more stable mortgage market, when viewed. Besides great. The number of product recalls may instead be a sign that lenders are tightening and condensing their ranges and focusing on their product offerings.
It is unlikely to come as a surprise that average rates have continued to rise, with both the two-year and five-year average flat rates rising for the 11th straight month.
As might be expected, the two-year average tracking rate has also increased, moving in line with recent base rate increases. At 3.33 percent, this is 1.75 percent higher than the average equivalent rate in December 2021.
While this is below the current two- or five-year average fixed rates, it is important that those tempted by one of these products are tempted, especially if that preference is based on a lower initial rate. Speak to a qualified advisor to consider the implications of that. .
“With the possibility of another increase in the prime rate this month, and the chance of two more increases before the end of the year, ensuring that the mortgage remains affordable for them if rates continue to rise is vital.”
Best mortgage rates and how to find them
Mortgage rates skyrocketed as the Bank of England’s base rate rose rapidly.
If you are looking to buy your first home, move or remortgage, or are a buy-to-let owner, it is important to get good mortgage advice from a broker who can help you find the best deal.
To help our readers find the best mortgage, This is Money has partnered with an independent, no-fee L&C broker.
The Mortgage Calculator backed by L&C allows you to filter deals to see which ones fit your home value and deposit level.
You can also compare different durations of mortgage rates, from two-year fixes, to five-year fixes and ten-year fixes, displaying monthly and total costs.
Use the tool at the link below to compare the best deals, factoring in fees and prices. You can also start an online application on your own time and save it as you move forward.
> Compare the best mortgage deals available now
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