Mortgage shock warning for 1.8million borrowers as rates creep up and market turmoil continues
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MILLIONS of homeowners could face higher mortgage costs this year as rates continue to creep up. Virgin Money hiked the cost of several of its fixed-rate mortgages this week, while Santander warned it may need to “nudge up” prices in the short-term.
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Rising government borrowing costs and uncertainty about the UK economy have pushed banks to increase their rates slightly. More than 1.8million borrowers with fixed-rate deals need to remortgage this year, according to trade body UK Finance. Here, Adele Cooke explains what you can do to keep repayments down.
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If it is ending in the next few months, don’t panic. Some lenders will let you lock in a new rate six months before your current one ends. Applying for a new deal now could give you peace of mind and let you know how much you will pay. You can always swap to a better offer if interest rates go down before your existing deal expires.
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David Hollingworth, director at L&C Mortgages, said: “It’s important to review your rate in good time so that you have time to arrange something and can switch smoothly. “Taking advice will help you keep track of the best overall value, factoring in not only the rate but also the fees that can mount up.”.
If you are due to remortgage but do not want to lock into a fixed deal yet, the worst thing you can do is roll on to your lender’s standard variable rate (SVR). SVRs often have much higher interest rates than fixed deals. This could mean that even if interest rates fall in a couple of months, the SVR rate will eat into any savings you make.
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