Interest rates might be on hold for now but the threat of a future rise should act as a ‘wake-up call’ to borrowers due to remortgage.
Mortgage industry experts have warned that despite yesterday’s announcement by the Bank of England to keep the base rate at 0.5% homeowners should remain alert to changes in the market.
This is because forecasts that interest rates are likely to rise this year are prompting lenders to adjust rates in preparation.
Craig McKinlay, sales and marketing director at Kensington Mortgages, said: “After just one rate rise since 2009, it’s all too easy to think the era of lower-interest rates will continue.
“However, the growing noise around a potential rise should act as a wake-up call for those borrowers who haven’t yet remortgaged to speak to a broker to secure a deal that is beneficial to them.
“There are still plenty of great deals out there on the market.”
Meanwhile Ishaan Malhi, CEO of online mortgage broker, Trussle, predicted it would only be a couple of months before the Bank of England lifted its rate.
He said: “This would impact all consumers, but particularly homeowners who’ll see mortgage rates rise to their highest level in a decade.
“In fact we’ve already seen many lenders increase their rates in recent months in anticipation of the rise.”
But, he also pointed out, that borrowers were reacting too. Recent figures revealed the number of people remortgaging in January had hit a nine year high.
He advised anyone searching out a new deal before the interest rates rise again to consider not only rates but also additional costs.
Malhi added: “As lenders change the rates of their deals, many will change the attached fees and incentives too. It’s important to take the total true cost into account, since a higher-rate deal can actually be cheaper overall than a low-rate deal.
“For example, choosing the lowest rate mortgage deal with one of the Big Six lenders would actually cost the average homeowner £400 more than if they were to choose the lender’s lowest true cost deal.”
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