Should you fix your mortgage now?
The recent cut in interest rates from 4.5% to 4.25% is welcome news for many homeowners. If you’re wondering whether you should fix your mortgage, then it’s worth exploring your options. Over recent weeks, most mortgage lenders have been steadily lowering their rates to around 4%. Fixed Rate mortgages can be cheaper in the long term when compared to Standard Variable Rate (SVR) deals. However, interest rates could fall further later this year.
As buyers rushed to beat the changes to Stamp Duty rules this April, lower mortgage rates boosted demand in 2024, especially in the fourth quarter. However, remortgage deals fell by 9% to 1.6 million, mostly because of fewer fixed-rate deals expiring. In 2025, this is likely to change as UK Finance predicts that 1.8 million fixed-rate mortgages are due to expire.
When should you change your mortgage?
We recommend reviewing your mortgage deal around six months before it ends to give your mortgage adviser enough time to find a more suitable option. If you don’t act, you might be moved onto your lender’s Standard Variable Rate (SVR), which could be more expensive.
Staying on an SVR could mean higher monthly payments, so it’s wise to shop around for a deal that better fits your needs. When switching, you can usually borrow the outstanding mortgage balance. Always get advice from a professional mortgage adviser before changing your mortgage.
How long should you fix your mortgage for?
It’s been estimated that two-year fixed mortgages could become cheaper than five-year deals (iPaper). Usually, longer fixed mortgage deals are more expensive than two-year deals because of interest rate uncertainty. However, following the Liz Truss Mini Budget in 2022, five-year fixed mortgages have become the cheaper option. As interest rates were higher, there has been an expectation that the rates would drop, which has started to happen.
However, the Bank of England may continue to make further reductions to the base rate during 2025. If this happens, many experts anticipate that two-year fixes will fall below five-year deals. Therefore, borrowers could be faced with a dilemma about which deal to choose.
Why should you use a mortgage broker?
It’s very time-consuming and often difficult to know where to start when attempting to research and compare mortgage deals on your own. When it comes to changing your mortgage, it’s also important to find a deal that suits your individual circumstances. As there are hundreds of mortgages with varying terms and conditions, always use a mortgage broker to help you find the right deal. Different mortgages suit different people and situations.
At Bubble Finance Hub, we’re members of the Legal and General Mortgage Club. This means we can access exclusive mortgage rates that you might not find elsewhere. Our mortgage advisers have whole of market access, so we can source a vast range of mortgage deals. Our approachable and supportive team will listen carefully to your needs to find you a suitable mortgage for your situation, explaining everything in plain English.
If you are looking at switching to a fixed-rate mortgage, get in touch to book an appointment and discuss your options.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
Thank you for reading our blog, Should you fix your mortgage now?
Bubble Finance Hub