The expected rise in the bank rate has led to lenders such as Lloyds, Santander, Natwest and Halifax increasing their rates in anticipation.
The lowest rate from Lloyds is now 2.02% on a 60% mortgage, an increase of 0.11%.
Halifax too have increased their rates, with their two year deals increasing by 0.36% and three year deals increasing by 0.3%.
Bank Rate rises
Bank rates rose at the end of 2017, which is the first rise in a decade, making rises in mortgage rates much more likely. It is most likely that monetary policy will be tightened earlier and to a greater degree that was originally expected.
What affects mortgage rates?
The swap rate and the level of deposits banks currently have are the major factors that determine the rate at which the lender is able to lend. The swap rates are influenced by expectations of future interest rates and inflation. A large drop in swap rates occurred in January 2016 but have risen significantly since then. The Bank of England can also have an influence by increasing costs on banks in the event of a runaway mortgage market.
The difference between fixed and variable mortgage rates
Fixed rates are just that, fixed for an initial period, with periods of two,three, five or ten years being the typical terms. After the specified period, borrowers are moved to the "standard variable rate of the lender" which is generally significantly higher.
The cheapest fixed deals – for borrowers with big deposits
If you can manage a 40% deposit, the Chelsea Building Society offers a rate of 1.29% fixed for two years.
The cheapest fixed deals – for first-time buyers or those with small deposits
The cheapest deal for those with 10% deposit is offered by Yorkshire Building Society, with a rate of 1.79% for their two year fix.
Are you thinking of making a move this year? Our Mortgage team here at Westminster Wealth can ensure that you receive the most suitable mortgage for your personal circumstances, needs and objectives. Contact us today.
Information is based on our current understanding of taxation legislation and regulations which is subject to change.
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