Recent reports are that the big lenders are poised to withdraw super-low mortgage deals from the market as they prepare to increased rates.
Last week many banks were preparing for a rush of buyers hoping to garb up the last of the low-cost deals after Bank of England Governor Mark Carney warned interest rates may rise from January.
Now Barclays, Santander and Yorkshire Building Society have all moved to increase rates and pulled cheap deals, adding hundreds of pounds on to the cost of new loans, Barclays has hiked its cheapest ten-year fixed rate from 2.99 per cent to 3.25 per cent.
On a typical £150,000 loan this will increase monthly repayments from £711 to £731 - costing homeowners £2,400 more over the ten years.
Barclays has also increased the rate on its cheapest five-year deal by 0.2 per cent to 2.59 per cent, which will increase repayments by £15 a month to £680.
Other deals, such as its 1.59 per cent two-year fix, have been withdrawn altogether.
Mortgage rates are the lowest they have ever been and this has been for an unprecedented number of years as the UK economy has dragged itself out of recession. Increasing rates have been inevitable, it was simply a case of when.
So what can home owners and buyers do?
Now is the time to fix your rate. If you’re on a low interest rate, contact your lender and ask about fixing. This may mean that you’re tied in for a period of time, and if your do choose to move during that time, you may incur redemption fees. However, if you’re looking for financial peace of mind a fixed rate mortgage is the way to go. You will know exactly how much your repayments will cost over the term you choose to fix for.
If you have no plans to sell you property, it may be worth considering fixing for a long period – after all with such low current rates, up is the only way to go.
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