What’s next for mortgage rates in the UK? – Forbes UK Advisor
News from the Office for National Statistics today shows UK house prices rose 10% in the year to November 2021, from 9.8% on the year to November in October.
The cost of an average home in November was £271,000, down from £246,000 on the figure 12 months earlier.
This price increase comes at a time when mortgage interest rates are rising slightly. In February 2022, the Bank of England raised its key rate from 0.25% to 0.5%.
Lenders including Nationwide and Santander announced they were reflecting the increase by increasing the cost of mortgages linked to bank rates and their standard variable lending rate (SVR) by 0.15%, effective February 1, 2022 .
Nationwide’s Base Mortgage Rate (BMR) and Standard Mortgage Rate (SMR) deals will rise 0.15% to 2.25% and 3.74% respectively, while Santander’s trailing rate, which applies at the end of its base rate follow-on agreements, will increase to 3.5%. Its standard variable rate will drop to 4.49%.
Many new fixed-rate transactions had already priced in rising interest rates, although more hikes are likely in sight. Yesterday, Nationwide slightly increased the cost of certain two-, three- and five-year fixed rate agreements.
Why are prices increasing?
The Bank of England’s Monetary Policy Committee (MPC) remains under pressure to cool the economy and reduce soaring inflation.
The consumer price index (CPI) jumped 5.4% in the 12 months to December 2021, marking its highest level in three decades.
It is feared to rise further in April 2022 when the energy price cap rises by 54%, leading to higher energy bills for millions of UK households.
What are today’s mortgage rates?
But, with so much to keep track of and mortgage rates changing often on a daily basis, how can you keep up to date? An easy way is to use our mortgage charts, powered by Trussle – a trusted mortgage broker and our mortgage partner.
To find out which offers are available at today’s rates for the type of mortgage you are looking for, you will need to enter your personal criteria in the table below. Here’s what to do:
- Indicate whether the mortgage must finance the purchase of a house or if it’s a mortgage for an existing property
- Enter the property value and the mortgage amount you need. This will automatically generate a percentage which is known as your ‘loan to value’. The lower the value of your loan, the lower the mortgage rates available
- Check the appropriate box if this is a purchase for lease or interest-only mortgage (you will need a repayment strategy in place for these transactions), or if you are looking for a mortgage to fund a shared ownership property
- Finally, filter your search by type of mortgage you want, for example a patch or a tracker of two or five years. The filter is set to a full mortgage term of 25 years, but you can change it if needed.
What else should I know?
The mortgage offers offering the cheapest rates usually come with fees. You can choose to pay them upfront or add them to the loan. To account for the cost of fees, sort your results by “initial period cost” (in the “Sorted by” drop-down menu).
Alternatively, you can sort the results by initial rate, lowest fee, or monthly repayment – even by lender’s trailing rate the deal will revert to at the end of the term.
While mortgage rates change daily, the cheapest are reserved for larger deposit amounts, typically 60% of the property’s value or more. And in any case, you will need sufficient income and a clean credit history to be accepted for a mortgage loan.
If you want to see what your monthly mortgage payments might look like under different scenarios while stacked against household bills, our mortgage calculator will do the sums.
While Trussle lists around 12,000 mortgage deals from 90 lenders – representing the vast majority of the market – some deals are sometimes available exclusively through a handful of brokers, so you might not see them.
When can I start a mortgage?
Mortgage offers from major lenders tend to last six months (as featured in our Best Lenders for Remortgage), although some lenders limit expiration dates to three months. It’s worth researching a new mortgage this far in advance because you’ll be able to lock in a rate you’re seeing today – with no fees and no strings attached.