Legal & General Mortgage Club has calculated how a rate rise would impact homeowners and is warning consumers that the historically low mortgage deals now available won’t be around for much longer.
The average rate for borrowers on a two year fixed mortgage is currently 2.68 per cent, compared to 3.67 per cent for the same product 18 months ago.
Legal & General analysis shows that for the average property in the UK, which is valued by Land Registry at £169,470, a 3 per cent increase in interest rates would increase monthly payments by £163.38, or £1,960.56 over a year. Even a more modest interest rate rise of 1 per cent would add an extra £63.99 to repayments each month or £767.88 per year.
Jeremy Duncombe, director, Legal & General Mortgage Club said: “Borrowers must not be complacent. The improving economic picture means a rise in interest rates is inevitable. Banks are already pricing in this increase so it is vital that they act now to get a good deal.
“Taking out a mortgage is the biggest financial commitment most people make so being properly informed about the options available is absolutely key. Speaking to an adviser is the best way to find out the products most suited to a borrower’s specific circumstances.”
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