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Behind The Numbers - Mortgage Rates
Mortgage rates: Why the headlines don’t always tell the full story
If you’ve been following the news recently, you might think mortgage rates are heading upwards.
With speculation about a possible increase in the Bank of England’s base rate, there’s understandably some uncertainty for people looking to buy a home or review their existing mortgage.
But there’s another side to the story. We’ve recently seen several mortgage lenders reduce their rates, creating some welcome opportunities for borrowers.
So why are mortgage rates falling when we’re hearing that interest rates could rise?
The answer is that mortgage rates don’t simply follow the Bank of England’s base rate.
Fixed mortgage rates are influenced by a number of factors, including swap rates, which reflect financial markets’ expectations of future interest rates. Lenders also consider competition, funding costs and their own lending targets when deciding what rates to offer.
This means lenders can reduce their mortgage rates even when the wider economic outlook remains uncertain.
What does this mean if you’re looking to buy?
For first-time buyers and home movers, it’s a reminder not to be put off by the headlines. There may be competitive mortgage deals available, even when the news suggests borrowing costs are heading in the opposite direction.
If you’re already a homeowner, particularly if your current fixed-rate deal is coming to an end, it’s worth reviewing your options early. You may be able to secure a new rate in advance and, depending on your lender and circumstances, review it again if more competitive deals become available.
Of course, nobody can predict exactly where mortgage rates will go next. But one thing is clear: the best time to explore your mortgage options isn’t necessarily when the headlines tell you it’s a good time.
If you’re thinking about buying, moving or remortgaging, speak to Harry Emblen at The Surrey Mortgage Company. A conversation could help you understand what’s available and what you can afford.
Your home may be repossessed if you do not keep up repayments on your mortgage
Cantell & Co and The Surrey Mortgage Company Limited are two separate entities. The Surrey Mortgage Company Limited provides mortgage and insurance advice only.