Mortgage rates - are they doubling?

Journalist: Samantha Downes, Currently at the I (business editing some Sundays (freelance) and Mortgage Solutions

ended 13. May 2022

L&C has published some research, which shows the typical repayment mortgage is now more than £100 higher. I'm looking for any good rates/comment/advice for a news piece I need to put up by lunchtime today - thank you so much and for you help with my other news pieces.

 "Mortgage rates have more than doubled since the historic low recorded in October last year, according to analysis by L&C Mortgages.

The average of the keenest low loan-to-value (LTV) two- and five-year remortgage rates from the top ten lenders has continued to escalate this year, to 2.36% and 2.46% respectively.

This has increased from the historic lows of 0.89% and 1.05% respectively last October.

L&C’s remortgage tracker shows that the monthly payment on a typical £150,000 repayment mortgage is now more than £100 higher than at the low, pushing annual mortgage payments up by more than £1200 per annum.

 



 

6 responses from the Newspage community

"Rates have more than doubled and, in some cases, they’ve tripled. In August 2021, just nine months ago, Halifax had a 60% LTV 2-year fixed-rate remortgage deal at 0.83%. As of May this year, that same deal is 2.54% which is more than three times higher. With the current bleak sentiment in the economy and inflation spiking, it’s nailed on that rates will continue to rise for the foreseeable future. It’s never been more critical for clients to consider how they will cope with increased payments when their current fix is up. There’s been a mistaken idea that brokers are always there to save someone money, whereas it’s really about customers getting the right deal and getting it over the line. We’ve now flipped to mitigating the impact of rate rise rises. We've become firefighters, in many respects."
"The key thing to take away from this research is the phrase “historic lows”. What we are seeing is rates adjusting towards a more historically normal level, something we’ve not seen for a long time due to the policy of central banks and Governments to keep rates low, something that could never be sustained long term. To quote The Hitchhiker’s Guide to the Galaxy “DON’T PANIC!”. Whilst interest rates may have doubled, or even tripled, as the vast majority of mortgages are on a repayment basis the actual payment you make does not follow suit; as a good chunk of your monthly payment is paying down the capital, so it’s just the interest element that rises. Also, unless you are currently looking to move, or your present deal is ending, these increases won’t be impacting you at the moment. That being said, everyone’s deal ends at some point, so it’s never been more necessary to get good quality, professional mortgage advice when looking at your mortgage. Advisers can not only make the process a lot less stressful, but can also access lenders that do not deal directly with the public."
"Brokers have been sounding the clarion call to implore consumers to act for months now and procrastinating is costing clients dearly in extra repayments as rates march upwards. The pace of change is scary. We're seeing some lenders like Santander increase rates twice in a week. Blink and you miss a deal. The drift is only one way at the moment so my genuine advice is that if you're on your standard variable rate, or are within the last 6 months of your current fixed rate, you need to get on Google, search for mortgage advice near you, and call whoever has the best reviews ASAP."
"Mortgages can be expensive business, these days. Rates have shot up quickly in recent and that, coupled with the cost of living crisis, will meany many people have to sell a kidney to heat the house. Rate aren't actually that bad at the moment, people are comparing them to the sub-1% deals seen at the back end of next year. What is compounding matters is that everything else on top is getting expensive. Now is the time to cut back on the cheeky Nandos and, if you are coming towards the end of your fixed term, now is the time to start looking at a better deal. Advice, in the current climate, has never been as important."
Mortgage interest rates are still low in comparison to rates pre 2008 there is no need to panic just go and seek professional advice if you are worried about your current rate or for some crazy reason you are on variable rate advisors have been banging on about rates not remaining at an all-time low for the past 2 -3 years now so nobody should be surprised rates have risen and the bank of england will most likely continue to rise the base rate for the foreseeable future to combat inflation, anyone currently on a fixed-rate mortgage product has nothing to worry about but if you are due to remortgage within the next 12 months don't expect super low rates like when your first took your mortgage out especially if you purchased your property in the last 3 years when rates at times have been sub 1% for those with masses of equity or deposits.
"Considering the Bank of England base rate was averaging around 5% just before the Credit Crunch of 2008, central rates are still incredibly low. I have listened to actuaries and economists predicting - or even demanding - rate rises for years so I think it's rather sobering to see mortgage rates increase slightly considering the global economic turmoil. The big question is how much higher can they go? Household budgets are already straining with rising energy and food costs. I have worked with our local food banks here in Bournemouth and Poole and it always startles me to hear stories of hard-working families trying to put food on their tables in this day and age, despite the rather out-of-touch claims by Lee Anderson MP. Those in ivory towers need to pay heed to the plight of ordinary people."