L&C said whilst speculation is rife rates may fall in the summer, those people who have come to the end of fixed rate deals but are waiting for rates to fall to fix into a new one are using a ‘risky strategy’.
For whilst interest rates may go down in June or, more likely August, this is not set in stone. What’s more, how lenders price their fixed-rate deals can be influenced by other factors.
In the last six months fixed rates have fluctuated a great deal even though the base rate has remained at 5.25%.
L&C said the average of the top ten lender two-year fixed remortgage rates dropped from 5.40% in November 2023 to 4.46% at the beginning of February 2024 before rising again to 4.94% now.
This means monthly payments for average two-year fixed rates are now £55 higher than at the low point in February for a £200k 25-year mortgage.
David Hollingworth, associate director at L&C Mortgages said: “It’s easy to understand why mortgage borrowers might be indecisive about securing a new deal when there’s so much speculation over when the Bank of England may cut interest rates.
“Fixed rates already reflect market expectation but continue to fluctuate as the data changes. That makes it almost impossible to second guess where fixed rates are headed next.
“The average two-year fixed remortgage rate has increased from the low point in February to sit almost half a percentage point higher now.
“Protecting against any ups in rates by securing a deal sooner doesn’t mean missing out on any downs, should rates later improve before your switch completes.”
Using a broker when you take out your mortgage will mean, in many cases, you’ll be able to review your options until the actual switch takes place.
Indeed, L&C Mortgages said it offered a free Rate Check service which enables customers to secure a deal now, protecting against any potential increases. However, they can review rates at any time until they make the final switch to a new deal.
An adviser can make sure there’s enough time to switch and avoid a period on a high standard variable rate.
Hollingworth added: “Rate Check can help borrowers maximise savings while still giving surety against losing out to rising rates.”
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