average mortgage interest rates
Kellie Steed, Uswitch Mortgages expert comments on the Bank of England interest rate announcement:
“As expected, the Bank of England Monetary Policy Committee has today announced the 13th consecutive rise in the UK base rate, which now sits at 5%. As inflation remains stubbornly at 8.7%, economists seem fairly confident that this run of base rate hikes is far from over, with some suggesting we’ll see it hit 6% by 2024.
“Average 2 year fixed-rate deals are now breaching the 6% mark (currently 6.44% at 75% LTV) – dangerously close to their peak of 6.65% in October 2022, following the mini-budget fiasco. 5 year fixes remain slightly lower, at an average of 5.79% at 75% LTV for residential mortgages.”
Is it time to fix?
“ While many people will be reluctant to lock in a rate at 5-6% when they’re presumably coming out of a much cheaper fixed-rate deal, this is still going to be preferable to the current average SVR (standard variable rate) of 7.99% – which borrowers will default onto if they choose not to remortgage onto a new deal.
“Based on lender behaviour in the run up to this announcement, it’s reasonable to expect them to act similarly ahead of the next base rate announcement on 3 August – particularly as another increase is on the cards.
“You can lock in a switch your mortgage deal up to six months ahead of your current deal’s end date – so if your mortgage is set to expire in 2023 now is the time to seek advice. “
What about variable rates?
“As always, those on a tracker mortgage will feel the immediate impact of this base rate rise, so should prepare to pay an additional 0.5% in interest from today. Certain tracker and discount deals remained just below the 5% mark prior to the announcement, but today’s announcement will likely have pushed them into the realms of 5%+.
“Whilst current fixed-rate deals are not particularly attractive, they at least provide the solace of a set period of certainty in this turbulent market – which variable-rate holders may now wish to consider. Seeking advice from a broker is highly recommended, especially if rising rates are beginning to cause you financial struggles.”
What to do if you’re struggling to pay your mortgage
“There are options available if you’re unable to afford your mortgage repayments following interest rate rises, and the most important factor is to reach out to your lender.
“Back in March, the Financial Conduct Authority (FCA) issued new guidance to lenders, urging them to provide better support to those struggling with higher mortgage interest. Options such as extending your term to reduce mortgage repayments were recommended.”
