Recent research has indicated that cheap mortgage rates may soon be coming to an end.
The latest UK Mortgage Trends report, produced by Moneyfacts, shows that the average two-year fixed rate deal has remained static this month, which is the first time it has remained unchanged since January 2016. This could be a sign that mortgage interest rate increases are on their way, despite still being at their lowest levels.
On closer inspection, Moneyfacts discovered that during the last month, 17 lenders had increased their rates, which includes some of the top lenders, like Halifax, Nationwide and HSBC. A two-year deal at 0.99% has recently been withdrawn by HSBC. Although the average five-year fixed rate deal has fallen slightly, there is still evidence that some lenders are increasing rates, due to economic uncertainty and wholesale costs.
Lenders obtain funds on wholesale markets and then lend to consumers. The rates they charge customers is dependent on the rates they are themselves charged, known as swap rates. As swap rates have recently increased by 0.5%, it is likely that lenders will follow suit.
According to Moneyfacts, competition has fuelled the low rates during the last couple of years, but now it is possible that wholesale costs could have an impact, as the uncertainty in UK and global markets take hold.
To prepare for the possible increase in mortgage interest rates, speak to a mortgage adviser who has had CeMAP training, which prepares them for situations where interest rates rise.
