Mortgage costs have fallen over the last year, but when will they rise?
The Bank of England cut its Base Rate to 0.25% a year ago, and the impact on mortgage rates has been huge, according to Moneyfacts.
The financial information provider said that two-year fixed rates have fallen from an average 2.47% to 2.24% in the last year, while five-year fixed deals are down from 3.08% to 2.8%.
Standard Variable Rates have also fallen – from an average 4.8% to 4.6%.
Rachel Springall, finance expert at moneyfacts.co.uk, said: “It’s clear to see that the decision by the Bank of England to cut Bank Base Rate to a record low of 0.25% has had a positive impact for mortgage borrowers. Rates have fallen, so borrowers who decide to switch to a more competitive rate will notice the benefit immediately by their lower monthly repayments.
“Borrowers who come off an average SVR of 4.60% today and switch to the average five-year fixed rate of 2.80% would save £146.48 a month on their repayments, which is £8,788.80 over a five-year period.”
Rise around the corner?
Although borrowers are enjoying record low mortgage rates now, they may not last for much longer, according to think-tank, The National Institute for Economic and Social Research (NIESR).
It has brought forward its projection for an interest rate rise by over a year, now predicting that the Bank of England will hike rates in early 2018.
That would be the first rate rise in 11 years and, if it happens, could mean now is the best time to remortgage and grab a low fixed rate mortgage.