With talk of another interest rate rise and house prices still on the increase, now is a key time to seek expert advice on your mortgage.

The property market is still buoyant despite the rising cost of living and the war in Ukraine. There are more buyers than properties, which is keeping prices high. Halifax published research recently showing that property prices rose in February at the fastest annual rate for 14 years. Prices grew by 10.8 per cent, pushing the average house price up to £278,123.

Zoopla says that the beginning of 2022 was the busiest start of the year for the housing market in the last six years.

There’s talk of buyers offering the asking price on a property and being turned down. Bidding wars are occurring in some cases as buyers compete with each other to try and secure their dream home.

Yet housing affordability is at a low, with rising interest rates and inflation at a 30 year high.

And with talk of rising interest rates, you could be forgiven for being a bit stressed or confused about the property market.

Base rate increases

The base rate has increased twice in the last several months, rising from 0.1 per cent in December to 0.25 per cent and then increasing to 0.5 per cent in February.

There are predictions that the base rate could be standing at 1.5 per cent by the end of this year. According to the website, Property and Mortgages, this could add around £129 onto monthly payments. An interest rate is also predicted to occur this week.

Mortgage payments

If you’re on a fixed-rate mortgage deal, then your monthly payments won’t be affected.

If you’re on a standard variable rate, you will have to absorb the increase if your lender decides to pass it on.

If you’re on a tracker rate mortgage, which is kept in line with the base rate, you will pay more. There are estimated to be around 850,000 tracker rate mortgages and more than a million standard variable rate mortgages.

If you’re on a fixed-rate mortgage loan that is due to expire in the next six months, it’s important to seek advice on switching to a more competitive deal. Otherwise, your lender will put you on its standard variable rate at the end of the fixed-rate term, which is likely to be more than you’re currently paying.

Fewer products

Unfortunately, there are fewer mortgage products available now compared to several months ago. According to financial information service Moneyfacts, there were 518 fewer mortgages available at the start of March compared to the start of February. Banks and building societies are being more cautious in these uncertain times.

Lenders are currently removing products with very little notice, so it’s important to act swiftly if you are applying for a mortgage. Make sure you get all of your paperwork ready now so that your mortgage can be secured promptly before a certain product is withdrawn.

During these challenging times, it’s important to seek expert advice. A good broker can find the best deal for you, based on your personal circumstances. If you go direct to a lender, you will only be able to choose from the range of mortgage products they are offering.

A broker can shop around on your behalf and also offer you bespoke advice. If you’re nearing the end of a fixed-rate term and would like us to review your mortgage, don’t hesitate to contact us and we’ll see if we can secure you a competitive deal. Similarly, if you’re a first-time buyer in need of advice, get in touch and we’ll be glad to help.

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