Do you have the right mortgage deal?
Are you sure that you have the right mortgage deal for your current situation? When did you last check your mortgage? Despite a recent fall in the base interest rate, mortgage rates are still relatively high compared to recent years. If you have a standard variable rate (SVR) mortgage, you may be feeling the pinch, and it might be the right time to switch lenders.
“The share of households spending a high proportion of their income on mortgage payments is still expected to increase slightly over the next two years.”
Bank of England
Current predictions for interest rates and mortgages
A recent report by the Bank of England has suggested mortgage payments could rise for 3 million households by 2026. They have predicted that by the end of that year, around 30% of mortgage holders may see an increase of £100 to their monthly payments. A typical household, for example, could see their repayments rise by 28% to £180 per month. It’s also thought that around 400,000 borrowers could see an increase of 50% or more.
Some market experts have predicted that 4.5% will become the ‘new normal’ when it comes to mortgage rates in the UK. In 2023, the cost of borrowing increased when the base interest rate reached 5.25%, which was a 16-year high.
It was hoped that the spike in interest rates would be a one-off. However, Lloyds Banking Group’s CEO, Charlie Nunn, warned this could be an indicator of what’s yet to come for the UK economy. Nunn has suggested that interest rates are expected to stay between 3.5% and 4.5%, which could continue to place pressure on homeowners.
According to RightMove, the current average rate for a 5-year fixed rate mortgage is 4.88%. When you compare this figure to pre-pandemic rates of 2.5% in 2019, this is significantly higher (Mortgageable). Therefore, it’s worth reviewing your existing mortgage deal.
Get a mortgage review
If your mortgage term is due to end in the next six months, get a mortgage review. By comparing mortgage deals with different lenders, you might be able to get a better rate, or a product better suited to your situation.
If the value of your home has increased since you bought your property, this will affect the loan-to-home value. As a result, you might have access to a wider range of deals than when you initially took out your mortgage. You will need to check with your current mortgage provider to see whether there are likely to be any early repayment fees.
Your trusted mortgage broker
It’s always worth getting a mortgage review, especially if you are approaching the end of your term. Switching your mortgage to a different provider could also give you the ability to access cash for home repairs or renovations.
At Bubble Finance Hub, we provide holistic mortgage advice to help you find the right solution for your needs. Our advice is always tailored to your exact circumstances. Our qualified and experienced mortgage advisers have whole of market access to hundreds of mortgage deals.
If you would like a mortgage review, please get in touch to book an appointment.
Your home or property may be repossessed if you do not keep up the repayments on your mortgage.
You may have to pay and early repayment charge to your existing lender if you remortgage.
Thank you for reading our blog, Do you have the right mortgage deal?
Bubble Finance Hub