Thisismoney / Mail Online seeks mortgage experts

ended 02. November 2021

Helen Crane At Thisismoney / Mail Online is working on a piece on mortgage rates today, based on the fact that there are now only a handful of sub-1% deals on the market. She says she can only see 3, but that's not including broker-only rates. She's looking for some comments on where rates are heading from here - will they continue to rise until the base rate changes? And after that are they likely to stabilise? And what would advice would you give to anyone coming up to the end of a fixed term in say the next 6 months?

Please keep your responses to 3-4 sentences MAX!

7 responses from the Newspage community

Star Quote
"Rather than predicting where interest rates will go, we work with known tangibles. This means advising our clients to keep their finances lean. In uncertain times, having an adaptable financial strategy is key. This means don't take on non-essential debt and generally don't stretch your finances to the maximum. Those whose fixed rate deals are due to end and are unable to absorb additional costs could be worst hit. Most mortgage lenders will allow a new fixed rate to be 'locked-in' up to six months in advance of the old one ending, so this is something to review now."
"For anyone coming to the end of their fixed term in the next six months, now is the time to apply to because most mortgage offers are valid for six months so they can secure the rate today even if they can’t complete the remortgage until April, when it looks like rates could be slightly higher. I see the slight increases in mortgage interest rates as more of a correction as rates got unprecedentedly low and lenders wanted to make sure they were attracting good quality business with headline rates. They will have one eye on inflation figures, though, as if inflation is 4% and they are charging 2% interest, the real interest rate is effectively -2%."
"Before the pandemic, the base rate was 0.75%, and everyone was happy enough with the deals they had; the property market was stable and inflation was kept in check. So if that's where we are headed back to, how can that possibly be a bad thing? Yes, some rates may rise; the problem is, we have a generation of homeowners who have never seen a real interest rate due to the artificially low-interest-rate environment we have been in since 2008. This was due to the financial crisis and our addiction to quantitative easing, and it's created a rod for our own backs." Interest rates rise and fall; perhaps it's time to remember that old Greek sage Heraclitus who postulated that the only constant in life was change (or flux as he put it), and therefore this is the nature of an economy.
"With a number of lenders having mortgage offers that last six months, it is feasible to review your mortgage now and have a new deal lined up and ready to go when your current deal ends. If your monthly household budget is tight and you are losing sleep over the possibility of a rate rise, this could be a wise move."
Rates seem like they are creeping up a bit but really this just seems to be stabilising back to what we were seeing a few months ago. We all knew sub 1% deals weren't sustainable forever. Plus most normal clients weren't eligible for them or were better off taking a higher rate with lower fees. The advice to anyone whose rate is ending in the next 6 months though? Don't muck about - call a broker today and secure the last good rates whilst they're available as most mortgage offers are valid for 6 months. These historically rates have been good whilst it's lasted though!
Rates may look like they are rising but this was always going to happen as the super low rates offered by some lenders were more of an aim to get headlines and also attract the best borrowers with the largest deposits or equity to balance their own books all the rates on the market now seem to be where they were a few months ago still super low just no major headline grabbers as let's be honest with ourselves that was never going to be sustainable for lenders. So once again no need to panic keep calm and carry on.
I'm confident we will look back at this period as the lowest interest rates in history, for many years to come. Whilst I don't suspect we will see significant rate rises any time soon, I do think we will continue to see gradual increases from here along with gradual increases to the base rate. If you are within 6 months of your current fixed rate expiring I would strongly advise speaking to a broker to see what your options are now as it is likely to save you money by being proactive.