Mortgage blog: Experts urge borrowers to act now as rates rise fast

Posted 11 July 2014 by Keith Osborne

Experts are urging mortgage borrowers to act now to secure the best deals with new research revealing that rates are starting to rise fast. New data from financial analysts Moneyfacts shows that the lowest rates on offer have "shot up" in the last month and the experts believe that "the run of low rates is well and truly over".

With mortgage rates having been low for years, the end of these record-breaking rates could be around the corner. We look at recent rate rises and why the best mortgage deals will now cost you more.

Fixed-rate deals rise by over 0.2% in just one month

Research from Moneyfacts has revealed that the cost of fixed-rate mortgage deals, especially the most popular two-year versions, has started to rise. After three months of historically low rates in the two-year 60% to 80% loan-to-value (LTV) tiers, the lowest rates offered by lenders has shot up in the last month, and the cheapest 90% deal has also increased.

The biggest increase in rates was in the two-year 65% LTV tier which rose from its record low of 1.63% to 1.89% in a single month. The best five-year 65% deal rose by 0.21% in a month and both the best two-year 80% and five-year 75% deals went up in price by 0.20%.

Sylvia Waycot, editor of, says: "These are not averages; they are the lowest rates being offered by lenders direct to borrowers for fixed-rate mortgages and they are moving upwards - now. Anyone taking the cheapest deal today will still get the cheapest deal, but it is going to cost more than it did last month."

Why are rates rising so fast?

One of the main reasons that the best mortgage deals now cost more than they did a couple of months ago is because of the speculation that the Bank of England will increase the Base rate in the near future.

Keith Osborne, editor of, explains: "Lenders are aware that the base rate is likely to rise in the next few months and that this will lead to a jump in mortgage rates. They are therefore reacting ahead of the increase and assuming that a rise in the base rate will mean it costs them more to lend out the same mortgage."

Sylvia Waycott from Moneyfacts adds: "Borrowers are literally set to pay the price of a rate rise before the BoE rate has in fact risen."

Experts are urging anyone thinking of taking out a new mortgage deal to act now. Osborne adds: "If you're thinking of remortgaging or signing up for a mortgage deal then now is the time to do it. There are some excellent deals available but the chances are that they won't be around for long."

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