While fixed mortgage rates have remained surprisingly stable since the base rate rise in November, standard variable rates (SVRs) have been steadily increasing, and the rest of the market has now begun to shift.
The latest data from moneyfacts.co.uk shows that 22 individual lenders have increased the mortgage rates in their range since the beginning of February, suggesting movement in all areas of the mortgage market.
Finance experts are warning of another price hike in May, and borrowers coming out of SVRs are being encouraged to look for a fixed-rate mortgage deal, while they are still relatively low, to protect themselves from future increases.
Mortgage repayments could increase by £35 per month
Average SVRs have increased from 4.60% to 4.76% over the past three months and another rise would see many borrowers significantly worse off. Charlotte Nelson, finance expert at Moneyfacts, said:
“A further 0.25% rise means that borrowers might see a £35 increase to monthly repayments (based on the average SVR) in a short six months.”
Bank of England governor Mark Carney prepared borrowers for further and faster interest rate rises earlier this month. While these are likely to be limited and gradual, borrowers are bracing themselves for significant changes in the mortgage market following a decade of low-interest rates.
Borrowers urged to find a fixed rate before May
Estate agent Savills predicts that an overall 1% rise in interest rates would add around £10bn to the UK’s mortgage bill. With the Bank of England governor indicating “something more than three” in terms of rises, borrowers that are due to come out of a fixed term or are currently on a standard variable rate should be looking at securing a new fixed deal before May.
