Inflation remaining higher than anticipated means more interest rate rises are likely. There’s never been a more crucial time to seek advice on your mortgage.

Mortgage interest rates look set to rise again in anticipation of a further Bank of England base rate increase next month. The base rate currently stands at 4.5%, but with inflation continuing to remain higher than expected, the Bank of England is expected to continue to take action.

On 25 May, Nationwide increased some of its mortgage rates by 0.45%, and big lenders are likely to follow suit if rates settle over 5.5%, according to The Telegraph.

The predicted base rate increase and rising interest rates have been caused by inflation figures revealed earlier this week. Inflation has dropped from its previous level of 10.1% in March to 8.7% in the year to April. However, inflation is not falling as fast as experts predicted – the predicted figure for April was 8.2%. As a result, the financial markets have lost confidence in inflation being controlled by the Bank of England’s strategy of increasing interest rates.

Inflation higher than anticipated

‘Although inflation is falling, it remains higher than expected,’ says MB Associates Sales Manager Phil Leivesley. ‘The markets now expect further Bank of England base rate rises, even though these increases are seemingly having little impact.

In the space of a month, swap rates – the rate lenders pay to financial institutions to acquire fixed funding – have jumped by about 0.75%, so fixed rate borrowing is about to get more expensive for everyone again.’

According to Moneyfacts, the average two-year fixed-rate mortgage has reached 5.35%.

Some smaller lenders have temporarily removed existing products to reprice them and will make them available again at higher borrowing rates.

Seek mortgage advice

Whether you plan to buy your first property or need to remortgage this year, there’s never been a more crucial time to seek expert advice from an experienced mortgage broker.

We work with a range of lenders and can find the most competitive and suitable mortgage product for you. We’ll also be glad to offer you bespoke advice.

Our message is simple – act now to ensure you obtain the most competitive deal on your mortgage.

Contact us today.

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