Mortgage Rates on the Rise: What’s Behind the Unexpected Hike?

As a homeowner or prospective buyer, you’re likely keeping a close eye on mortgage rates. The recent surge in rates has left many wondering what’s driving this trend. In this article, we’ll delve into the reasons behind the unexpected hike and what it means for you.

Borrowing Just Got More Expensive

Mortgage rates often mirror the Bank of England’s benchmark interest rates. When the base rate increases, borrowing becomes more expensive. This, in turn, affects mortgage lenders’ funding costs. The current rate hike is a response to the Bank’s potential move to increase interest rates.

Mortgage rates have been on the rise, making borrowing more expensive.

Lenders Don’t Want Too Many Customers

Mortgage brokers stress that the recent rate hike is not a repeat of the rapid increases seen in the past two years. However, lenders are cautious not to attract too many customers, which could lead to an influx of applications they might struggle to handle.

The Global Economic Outlook Matters

The global economic outlook has not been as positive as expected, with the US central bank keeping interest rates unchanged due to persistent inflation. This uncertainty has contributed to the current bump in mortgage rates.

The global economic outlook has a significant impact on mortgage rates.

What the Bank of England Says Matters

The Bank of England’s decisions have a significant impact on mortgage rates. While the outlook for the coming months is still broadly positive, any suggestion from the Bank that it might move soon on benchmark interest rates could bring mortgage rates back down.

The Bank of England’s decisions have a significant impact on mortgage rates.

What This Means for You

If you’re remortgaging, it’s essential to act quickly to lock in a deal. You may have three or six months prior to the deadline to secure a better rate if the situation improves. Doing nothing during this time of uncertainty can be expensive, as you might be moved to a default variable rate when your fixed deal expires.

Act quickly to lock in a deal and avoid being moved to a default variable rate.

Making Your Mortgage More Affordable

There are ways to make your mortgage more affordable:

• Make overpayments to save later
• Consider an interest-only mortgage to keep monthly payments low
• Extend the life of your mortgage to reduce monthly payments

Explore ways to make your mortgage more affordable.

In conclusion, the recent hike in mortgage rates is a complex issue with multiple factors at play. While the outlook is still broadly positive, it’s essential to stay informed and adapt to the changing landscape.