Why 'the end is nigh' for low mortgage rates
Over the last few months borrowers in the UK have benefited from record low mortgage rates. Mortgage customers have been able to take advantage of record-breaking deals but now a leading financial analyst has warned that 'the end is nigh' for cut-price mortgages.
Moneyfacts research shows that average mortgage rates have already started to increase, with some of the best deals having been withdrawn.
“Run of record lows is coming to an end”
Research from the financial analysts has revealed that the cost of mortgages has started to rise over the last month, with the organisation stating that “the run of record lows is coming to an end”.
Rates at 60% loan to value have been increased the most, with the average rate for a two-year deal rising from 1.81% at the start of July to 1.86% now. Five-year rates have witnessed a similar increase, up from 2.54% to 2.59% over the same period.
The rise has been partly attributed to comments made by the Governor of the Bank of England in July where he suggested that the base rate could start to rise in early 2016. Since then, swap rates – the rates at which banks lend money to each other – have risen slightly and lenders have increased rates across their range of mortgage products, almost as if they're “preparing for the inevitable rise to happen”, says Charlotte Nelson, finance expert at Moneyfacts.
Nelson says that of the 125 mortgage changes recorded by Moneyfacts in July, 36 were for increases, more than double the rate of increases recorded during the previous month. In comparison, there were just six rate increases in January this year.
“In the past few months borrowers have seen the lowest ever rates on the market, and at the moment some of these appear to remain unscathed, at least at higher LTVs,” says Nelson. "But, with signs of rates increasing already, these record lows will not last forever, and the number of changes signals that we've at least reached the point where rates have flat-lined - and the only way for them to go is up.”
Experts have urged borrowers to move quickly to secure the best deals. Keith Osborne, editor of Whathouse.com, adds: “While some interest rates have already crept up, there are still plenty of excellent deals in the marketplace. If you're looking for a new mortgage or perhaps you're coming to the end of your current deal, it could pay to move now in order to secure a great deal before rates rise.”
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