With fixed rate mortgage pricing at rock bottom there’s never been a better time to lock in your mortgage rate for the medium term, particularly with inflation still on the up.
There have been murmurings for a while now that interest rates may have to rise to combat inflation and with the August CPI figures coming in at 2.9%, up from 2.6% a month earlier, the Bank of England MPC will need to weigh up its options very carefully.
Apart from taking advantage of a fixed rate to protect against possible rate rises in the next few years, another potential mortgage related issue has today been highlighted by Tesco Bank.
The Supermarket bank’s latest analysis suggests that as many as 2.5 million people may be paying too much for their home loan because they are sitting on their lenders Standard Variable Rate (SVR).
With the average SVR at 4.39% (and some nearer 6%) it is way more expensive than many of the fixed rate mortgage deals on the market today – with many now below 2%.
The Tesco Bank research reveals that if base rate increased by 0.25% and the lenders SVR followed suit then one third of borrowers would have to find an extra £21 per month to cover repayments (based on mortgage balance of £178,235).
For most people their monthly mortgage payment takes up the biggest chunk of their monthly income, so it makes perfect sense to shop around for a cheaper deal.
If spending a couple of hours saves you £50 or £100 per month (and much more in some cases) it’ll be the best paid two hours work you’ll ever do.