Avoid rising mortgage rates with a longer term fix.
Six months ago the Bank of England predicted mortgage rates would rise in the first half of 2012, and this is exactly what has happened.
Standard variable rate mortgage holders were hit by increases earlier this month and mortgage rates for new deals have risen by up to 0.5%.
The Bank of England advise that UK mortgage rates are expected to rise again amid fears of an escalating eurozone crisis. It is estimated that around 10% of mortgage-holders will now have to pay hundreds of pounds extra in mortgage payments each year.
Banks have to borrow money far more money then they lend to ensure there is always enough in their reserve meet withdrawals. Banks short of funds borrow from other banks who have excess cash. At present there few with excess cash and so those who are in a position to lend are able to charge a higher rate.
The base rate may have stayed the same at 0.5% for the past 3 years, however interbank rates have increased significantly in the last year.
With these costs now being passed onto mortgage holders, is there anything that can be done to avoid an increase?
The answer could be a longer term fix.
Historically speaking the rates offered for a longer term fix such as a period of 10 years remain competitive. Longer term deals remove the risk of a rate increase and take away the need to repeatedly remortgage.
Before mortgage rates rise further contact Deal Direct.
One of our skilled advisers will find you the most competitive longer term fix on offer.
