Mortgage Rates: What’s Next for Borrowers?

As the UK’s largest lender, Lloyds Banking Group’s CEO, Charlie Nunn, has given his verdict on the future of mortgage rates. In a recent interview with Sky News, Nunn predicted that interest rates, which have a direct impact on mortgage costs, are likely to fall this year. However, he cautioned that a return to the ultra-low interest rates seen before 2021 is unlikely.

Mortgage rates have been on the rise, but a fall is expected this year.

The Bank of England’s base rate, which influences interest rates on mortgages, loans, and savings accounts, has been held at 5.25% since earlier this month. Despite this, major lenders have started to trim mortgage rates, giving hope to borrowers that more could follow suit.

“We’ve just come off a decade where mortgages have been in the 1.5 to 2.5% range.” - Charlie Nunn, CEO of Lloyds Banking Group

The Importance of Housing in the UK

As the UK prepares for the General Election, Nunn emphasized the importance of housing in the country. He believes that the incoming government should create a clear plan for cash to build new homes.

The UK’s housing crisis is a pressing issue that needs to be addressed.

Reducing Mortgage Costs

So, what can borrowers do to reduce their mortgage costs? Here are a few tips:

Increase Your Mortgage Term

When you take out a mortgage, repayments are calculated over a set time period, usually between 20-30 years. The longer the mortgage term, the lower the monthly repayments, as you are repaying the loan over a longer time period.

Get the Best Deal

The interest rate on your mortgage deal is a huge factor in dictating how big or small your monthly payments will be. Getting the best rate is crucial, as even a rate difference of 0.2% impacts your bills - especially if you have a larger mortgage.

Go Interest-Only for a While

Interest-only deals were widely available before the financial crisis in 2009. These deals let borrowers only pay back the interest each month, without having to pay back the actual debt.

Offset Your Mortgage

Everyone should have a rainy day savings pot in case of emergency costs. But an offset mortgage is one way of still having cash available should you need it, but in the meantime, you can use the money to lower the interest you pay on your mortgage.

Fix Your Deal for Longer

If you’re coming to the end of your mortgage term and are looking to get the lowest possible repayment, it could be worth fixing for longer.

Overpay Your Mortgage

This might sound counter-intuitive, but paying off extra cash on your mortgage can actually bring down your monthly costs in the long run.

Use a mortgage calculator to see how much you can save by overpaying your mortgage.

As the mortgage landscape continues to evolve, borrowers must stay informed and adapt to the changing interest rates. By following these tips and staying up-to-date with the latest news, you can make the most of your mortgage and achieve your financial goals.