As discussions continue around the possibility of a rise in the Bank of England base rate, fixed rate deals are already rising.
For the last few years, interest rates have been steadily falling, so that there are some of the lowest fixed rate deals available. However, a number of lenders have already started to increase the rates on offer.
According to recent data from the Bank of England, rates have increased during May and June this year. Two-year fixed rate deals are the most popular of the new mortgages being taken out. These allow the borrower to budget for a fixed interest rate, and at the end, either switch to a new deal or revert to the lender’s Standard Variable Rate.
The interest rates on offer for fixed rate deals are dependent on the size of the deposit, with a lower rate of interest for a higher deposit. If a borrower is remortgaging, the interest rate will depend on the amount of equity in the property. In April this year, a fixed two-year deal for a borrower with a 10% deposit would have been available at 2.43%, but has now risen to 2.5%. If the borrower had a deposit of 40%, a two-year deal at 1.24% would have been available in April this year, but has now risen to 1.38%.
Although fixed rate deals will not increase automatically in line with Bank of England interest rate increases, they will continue to rise, which makes a CeMAP qualified mortgage advisor’s advice more important than ever.
