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With the Bank of England threatening to raise its base rates experts are warning that it is time for homeowners to fix their mortgages.

Ben Wilkie, editor at What Mortgage, suggested that UK home owners are anticipating a rise in interest rates in the near future and are choosing to protect themselves by moving on to a fixed rate mortgage now.

He also warned those already on a fixed rate whose terms may be coming to an end that a shift to a variable interest rate may give them a shock.

Mr Wilkie explained that between the price being paid on a current fixed rate and that on a variable there could be “a huge amount of difference” for those not expecting the sharp jump and told consumers to keep their eye on the market.

Gross mortgage lending in February was £9.5 billion, the Council of Mortgage Lenders recently reported, continuing a year of slow growth in the availability of funds for those looking for a new house.

The Bank of England has chosen to hold base rate at 0.5%, despite being under pressure to hike interest rates as inflation spirals. Read the rest of this entry »

The average interest rate on a two-year tracker mortgage has dropped to its lowest level for over 20 years, while the average two-year fixed rate mortgage has increased to its highest level in almost a year, show latest figures from Moneyfacts.co.uk.
The average rate on a two-year tracker mortgage is now 3.40%, while the average rate on a two-year fixed rate mortgage has increased to 4.59%.
Michelle Slade, financial analyst for Moneyfacts.co.uk, says some borrowers have taken a wait and see approach over the last two years, preferring to remain on a lenders standard variable rate rather than move to a more expensive mortgage deal.

She says: “Talk of an imminent base rate rise has caused a surge in the demand for new mortgage deals.
“Lender’s appear to be trying to tempt borrowers off record low SVRs on to new tracker deals instead.
“Rates on tracker deals continue to be more competitive than fixed rate deals, but borrowers need to ensure they factor in the effect of any base rate rises on their monthly repayment when considering a new deal.
“The rise in swap rates appears to have plateaued, but the rise in fixed rates continues – albeit at a slower pace than a few months ago.
“Borrowers looking for a fixed rate mortgage need to act fast as deals are only in the market for an average of two weeks.”