The fee-free adviser looked at the interest rates being applied to fixed rate deals from the top 10 lenders in the UK. It discovered borrowers taking out mortgages in March would be paying much more than they would if they had been accepted for the mortgage in October.
Its data showed two-year fixed rates had climbed by 1% since October 2021, when rates were at a record low.
Borrowers taking out five-year fixed rates in March would be paying, on average, 0.92% more than they would have done in October, L&C revealed.
This meant mortgage payments would be almost £70 per month more in March and over £800 more per year.
L&C’s data also showed how people on their bank’s standard variable rate, also known as the reversion rate, would be paying on average 0.30% more.
These increases all come following two Bank of England (BoE) base rate hikes in December and February respectively.
And with the BoE due to meet next week to discuss if further rate rises are required, borrowers may need to prepare for further price increases.
David Hollingworth, associate director at L&C Mortgages said: “Mortgage rates have been shifting rapidly as lenders are forced to adapt to the impact of market expectation of higher rates on their funding costs.
“The sheer pace of change is something that could take borrowers by surprise, especially when the cost of living and other outgoings such as energy are already rising too.”
Protecting your repayments
The good news is, whilst rates are increasing, they are still low in relative terms, meaning borrowing is still reasonably cheap.
David explained: “Fixed rates are still at historically attractive levels so borrowers should review their current deal to make sure that they are on the best deal and protecting their position, especially against a backdrop of rocketing outgoings and further potential increases in base rate.
“Rates are moving quickly though and deals rapidly come and go, often only lasting a matter of days before being replaced with higher rates.
“Borrowers can lock in at a current rate up to six months ahead giving the chance to review well ahead and ensure a smooth switch over when their current deal ends. That could help them get ahead of any further rate rises.”
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The biggest worry, especially for say buy to let landlords with HMO’s, are that with energy prices increasing significantly, I expect the Bank of England is so far removed from normal every day people, they’ll just put up interest rates again ‘to control inflation’.
We’ve already see a massive rise in homelessness under this government, and as landlords quit their HMO’s (Ive just quit mine), it means more people won’t have a place to live due to lack of supply.
We need to help people right at the very bottom, either in poverty, or close to poverty.