Borrowers looking to remortgage need to take advantage of the record low deals on offer while they still have the chance, new data suggests.
According to moneyfacts.co.uk, time may be up for many of the competitive deals on the market, with average remortgage rates creeping up in the past six months.
The average two-year fixed rate is now 2.58%, up from 2.44% six months ago.
Meanwhile, the average five-year fixed rate remortgage has increased from 2.96% to 2.98% in the last six months.
Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “Rates have been on a downward trajectory for such a time that it has almost become the new norm. Those looking to remortgage today may therefore be shocked to see that some rates have witnessed a 0.14% increase in just six months.”
The average two-year fixed rate will cost borrowers £14.11 a month or £169.32 a year more today compared to six months ago.
Nelson said that with a potential hike in the Bank of England base rate on the cards, there was “no telling” by how much more they could potentially rise.
“The uncertainty in the economy, combined with base rate speculation, has caused the need for providers to rethink their offerings and react accordingly. While the lowest rates in the market remain put for the time being, lenders have started to tinker with their products that are not in the spotlight.
“Due to all the talk surrounding base rate, borrowers have started to consider their options in case the base rate were indeed to increase. Given that £35 billion worth of mortgages will be reaching maturity this autumn, a large chunk of borrowers will be facing these rising rates, which means some consideration will be required.
“Borrowers should not be put off from remortgaging, however, as there are still savings to be made, particularly as the average SVR currently stands at 4.60%. And of course, the rate is not the only cost for borrowers to consider; they’ll want to be on the lookout for decent incentives and regularly check in on the Best Buys to see what is out there.”
Since the financial crisis in 2008 mortgage rates have steadily fallen.
The Bank of England cut interest rates in August 2016 from 0.50% to 0.25% – the lowest on record and the first interest rate cut since 2009 when the financial crisis was at its peak.
This led to a number of lenders slashing their rates and competition in the mortgage market heating up.
Bank of England governor Mark Carney has hinted a rate rise could be on the cards to keep inflation from spiralling out of control.
Since inflation hit a four-year-high of 2.9% in May – well above the Bank’s target of 2% – many economists are predicting a rise in the base rate sooner rather than later.
If the Bank decides to hike interest rates, the knock on effect could see lenders raise mortgage rates accordingly.
However, despite the possibility of a rate hike to 0.50%, many experts expect rates to stay low and any rise to be gentle.
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