As the inevitable Bank of England base rate rise loomed, many mortgage holders became acutely aware of the need to secure the best deal, but some lenders didn’t up their rates as expected.
Last month’s decision by the Bank of England to raise the base rate was an anxious time for borrowers worried about the impact on mortgage rates. Whether the 0.25% increase would be passed on by lenders immediately was the main cause of concern for those on variable rates. However, it seems that lenders have been lenient on borrowers according to Moneyfacts.co.uk, which states that no average has so far increased by the full 0.25%.
Average two-year fixed rates remain stationary
Many providers had already priced the rate rise into their fixed-rate mortgages ahead of the announcement, to avoid losing customers who were likely to re-evaluate their deal following a rate rise.
All but the two-year fixed rate average mortgage rates have seen an increase since the base rate announcement. While this hasn’t been the full 0.25%, some borrowers will be starting to see the impact on their monthly repayments. According to Moneyfacts, the average standard variable rate (SVR) has risen by 0.12% and the average two-year tracker and lifetime tracker rates by 0.22%.
While rates seem to be creeping upwards, lenders have been much slower to respond to the base rate rise than previously. Moneyfacts.co.uk finance expert Charlotte Nelson said: “After November’s rate rise last year, the full 0.25% was seen in the average two-year tracker just 16 days later.”
Borrowers encouraged to switch from SVR
Those on a standard variable rate may not have felt the full impact of the latest base rate rise, but they are also not benefiting from competitive rates. The highest SVR currently available is 6.33% and making the switch to a fixed-rate mortgage would offer significant savings. For example, moving from an average SVR of 4.84% to the average fixed-rate of 2.53% on a £200,000 25-year repayment mortgage would save £250.35 per month, according to Moneyfacts.
For borrowers sitting on a standard variable rate, the advice is to seek out a long-term fixed-rate deal to save now and protect themselves from future rate rises.