• Pensions

    Pensions+

    Whether you're saving for retirement or you are facing decisions at retirement, we can help

    View more
  • Savings Planning

    Savings+Planning

    Saving for the future is important and we can help you select the right product to achieve your goals

    View more
  • Mortgage Advice

    Mortgage+Advice

    We are specialists in arranging mortgages for First Time Buyers, people moving home, 'Buy to Let' mortgages and remortgages.

    View more
  • Investment Advice

    Investment+Advice

    Make the most of your money and don't leave it languishing in Building Society accounts

    View more
  • Equity Release

    Equity+Release

    Allows you to access cash tied up in your home - speak to one of our qualified advisers

    View more
  • Protect Insure

    Protect+Insure

    We can shop around for the lowest cost life cover, income protection and critical illness cover

    View more
 

Base rate rumours cause fixed mortgage rate rises

Last week we reported that lenders had started to increase their mortgage rates, and this week we've got further confirmation that the end of record low mortgage rates could be upon us, with data from the latest Moneyfacts UK Mortgage Trends Treasury Report showing that, as SWAP rates have seen a steep rise due to base rate speculation, the average two-year fixed mortgage rate is also starting to edge up.

The figures from the report, due to be published later this week, show that the average two-year fixed mortgage rate has fallen by 0.02% from September to stand at 2.20% this month, another record low. However, this month-on-month fall doesn't quite tell the whole story, as additional figures show that the average has now increased by 0.04% from 1 October, and there's no indication of a reversal.

The graph below goes some way to explaining the recent uptick, and it's all down to SWAP rates. The SWAP rate is the interest rate charged between banks for lending to each other, with this wholesale cost often having an impact on the mortgage rates charged to borrowers. As you can see, SWAP rates have jumped up in recent weeks, and this is starting to filter through into mortgage rates.

http://media.moneyfacts.co.uk/image/BaseRateMortgageRiseGraph_2937_x_1969.jpg

"The higher inflation figure announced on 12 September, coupled with the Bank of England stepping up its interest rate warnings, gave a clear indication to markets that a base rate rise is likely in the near future," explained Charlotte Nelson, finance expert at Moneyfacts. "This acted as a catalyst for SWAP rates to rise, with the two-year SWAP rate increasing from 0.54% to 0.82% in just one month.

"In the past few years, the link between mortgage rates and SWAP rates appeared to be broken, not only due to the volatility of the rates but also the fierce competition among lenders in the mortgage market. However, the substantial increase in SWAP rate seen in the past few weeks has quickly changed this, with 21 providers upping their rates since 12 September."

Essentially, providers are now starting to factor SWAP rate rises – and therefore a potential base rate rise – into their pricing, which is causing the average two-year mortgage rate to creep up. This new trend is showing no sign of abating; with rates having sat at record lows for so long, it's difficult for providers to absorb the increased cost, with the only option being to up their own mortgage rates.

"As a result, lenders are now treading a fine line between needing to remain competitive to protect their mortgage book and absorbing the cost of higher SWAP rates," continued Charlotte, which means further rate rises could be on the cards

"This has also given the mortgage market the strongest indication for some time that a base rate rise is likely, which means it is crunch time for borrowers looking to remortgage; it is vital they act fast to ensure they get the best possible deal before their increase."

What next?

Mortgage rates are on the rise – which means now's the time to take action! If you've been toying with the idea of remortgaging for a while, you don't want to wait much longer, otherwise you could find that the cheapest mortgage rates are increasingly difficult to come by.

Source:  Moneyfacts

Sam: 10th Oct 2017 14:09:00

 

Latest News

Lenders relax maximum mortgage age
Lenders relax maximum mortgage age If you're an older homeowner, the last few years may have been challenging if you were looking to remortgage your property.

Read More >>

Drawdown investors remain optimistic
Drawdown investors remain optimistic The onset of the pension freedoms gave retirees more choice than ever over how to spend their pension pot, and many are making the most of that flexibility by opting for income drawdown, whereby their pension savings remain invested in the stock market. Yet this in itself can pose risks, particularly given how volatile the stock market can be, but luckily, investors don't seem to be put off.

Read More >>

Equity release lending hits record £3.6bn
Equity release lending hits record £3.6bn 2018 proved to be another record year for the equity release sector, with latest figures revealing that retired homeowners released £3.6bn in property wealth over the year, the highest annual total ever seen – and by all accounts, 2019 could go even better!

Read More >>

Motivation to remortgage at 11-year high
Motivation to remortgage at 11-year high The financial incentive for mortgage borrowers reaching the end of their current fixed rate deal to remortgage to a new deal has soared to an 11-year high.

Read More >>

What's coming up in 2018....

Read More >>

See all News...
  • Pensions

    Pensions+

    Whether you're saving for retirement or you are facing decisions at retirement, we can help

    View more
  • Savings Planning

    Savings+Planning

    Saving for the future is important and we can help you select the right product to achieve your goals

    View more
  • Mortgage Advice

    Mortgage+Advice

    We are specialists in arranging mortgages for First Time Buyers, people moving home, 'Buy to Let' mortgages and remortgages.

    View more
  • Investment Advice

    Investment+Advice

    Make the most of your money and don't leave it languishing in Building Society accounts

    View more
  • Equity Release

    Equity+Release

    Allows you to access cash tied up in your home - speak to one of our qualified advisers

    View more
  • Protect Insure

    Protect+Insure

    We can shop around for the lowest cost life cover, income protection and critical illness cover

    View more