The base rate is at an all-time low, and has been so for three years now – but although the Bank of England looks unlikely to increase it, lenders are beginning to raise their interest rates.
In the past few weeks, more than 1.2m homeowners have discovered they’ll be affected by a rise in their monthly payments, thanks to two major mortgage lenders announcing rate hikes.
Around 1m Halifax mortgage customers currently on a variable rate of 3.5% discovered that the bank would be raising their Standard Variable Rate (SVR) to 3.99%, while around 200,000 offset borrowers at RBS/NatWest found out that their rate would be brought in line with the bank’s wider SVR of 4%, a rise of 0.25%.
The general consensus is that base rates will remain at the same level for another few years, but because of the situation in the Eurozone, there have been murmurings about a possible second credit crunch – so borrowers may like to consider whether now is the right time to switch to a new product, and there are some very tempting options out there.
Compared to the current low base rate of 0.5%, mortgage lenders’ rates may seem relatively high, but the current deals available are very cheap indeed historically speaking. For example, five-year fixes are available at under 3.5%, while lifetime trackers can be found under 3%.
If you’re currently on your bank’s SVR, then it could pay to investigate the options open to you, and discover whether you could pay less and enjoy greater peace of mind should interest rates rise. Why not speak to our Wealth Management department? Their free, independent advice will help you to make the best decision when it comes to home loans.
