A prominent mortgage expert says it’s likely that the Bank of England will today select a ‘hold’ on the base interest rate.
But even so, borrowers face rising fixed rate costs, it’s claimed.
David Hollingworth, associate director at L&C Mortgages, comments: “Market forecasts increasingly point towards the Bank of England holding the base rate once again in July, but borrowers can’t afford to rest on their laurels, as the market has continued to move quickly.
“Lower than expected inflation last month may give the Bank of England some room to hold rates again this month, bolstered by a fall in oil prices after the pause in military action.
“However, that data is looking backwards, when financial markets are more concerned with what could be coming down the track. So, borrowers can’t take a base rate hold as a signal of cheaper, or steadier mortgage rates in the weeks ahead.”
Fixed-rate deals are continuing to increase in cost this week – Halifax, Coventry BS and TSB are amongst the latest to increase.
The average 2-year remortgage fixed rate costs are up over 20 basis points from 4.53% to 4.75%, 5-year up even more from 4.58% to 4.83%.
The increase equates to a rise in monthly payments of £25 per month for the average 2 year and almost £29 per month for the 5 year based on a £200k 25 year repayment mortgage.
Hollingworth goes on to say: “Only a month ago mortgage rates were falling with hope for the trend to continue through the summer. The resumption of hostility in the Middle East has put paid to that, once again highlighting how quickly market volatility can change the outlook for borrowers.
“Fixed rates have consequently been rising since the beginning of July. The average of the best remortgage rates from the top ten lenders shows a rapid increase in both 2- and 5-year rates since the beginning of July, meaning deals will cost hundreds more per annum.
“The good news is that lenders continue to compete, which helps ensure rates are as attractive as market conditions allow. But borrowers wondering what to do for the best may be better to lock in a rate now to avoid more increases. They can review again prior to completion to see if rates have improved.”
