According to the Office for National Statistics, UK house prices increased by 10% in the year to November 2021, up from 9.8% in the previous year. In November, the average price of a home was £271,000, up from £246,000 a year earlier. Prices are rising at a time when mortgage interest rates are increasing. The Bank of England hiked its base rate from 0.25 percent to 0.5 percent in February 2022. Experts and agencies providing property advice services have pointed out that the lenders such as Nationwide and Santander have indicated that, effective February 1, 2022, they will raise the cost of bank rate-linked mortgage packages and their standard variable rate (SVR) of lending by 0.15 percent.
The base mortgage rate (BMR) and standard mortgage rate (SMR) arrangements from Nationwide will go up by 0.15 percent to 2.25 percent and 3.74 percent, respectively, while Santander’s follow-on rate, which applies at the end of its base rate tracker deals, will go up to 3.5 percent. It will raise its standard variable rate to 4.49 percent. The interest rate boost has already been built into many new fixed rate deals, however more hikes are predicted in the future. Nationwide raised the price of some two, three, and five-year fixed rate mortgages yesterday.
Why are interest rates rising?
The Monetary Policy Committee (MPC) of the Bank of England is under pressure to slow the economy and bring inflation down. In the year ending December 2021, the Consumer Price Index (CPI) increased by 5.4 percent, reaching its highest level in three decades.
There are concerns that it may climb much more in April 2022, when the energy price cap would increase by 54%, resulting in higher energy costs for millions more UK households.
What are the current mortgage interest rates?
But, with so much to remember and mortgage rates fluctuating on a daily basis, how can you stay on top of everything? Our mortgage tables, powered by Trussle, a renowned mortgage broker and our mortgage partner, are a simple way to get started.
You’ll need to enter your specific requirements into the table below to see what deals are available at today’s rates for the type of mortgage you’re looking for. Here’s what you should do:
Choose whether the mortgage is for a new home purchase or a refinance of an existing home. Enter the property’s worth and the amount of the mortgage you’ll need. This will calculate a percentage for you, which is known as your ‘loan to value.’ The smaller your loan-to-value ratio, the lower your mortgage rates will be. If you’re searching for a buy-to-let or interest-only mortgage (for which you’ll need a repayment strategy), or if you’re seeking for a mortgage to fund a shared ownership property, check the appropriate box. You’ll need to enter your specific requirements into the table below to see what deals are available at today’s rates for the type of mortgage you’re looking for. Here’s what you should do:
Choose whether the mortgage is for a new home purchase or a refinance of an existing home. Enter the property’s worth and the amount of the mortgage you’ll need. This will calculate a percentage for you, which is known as your ‘loan to value.’ The smaller your loan-to-value ratio, the lower your mortgage rates will be. If you’re searching for a buy-to-let or interest-only mortgage (for which you’ll need a repayment strategy), or if you’re seeking for a mortgage to fund a shared ownership property, check the appropriate box. Finally, narrow your search by the sort of mortgage you desire, such as a two- or five-year fixed rate or a tracker rate. The filter defaults to a 25-year mortgage term, but you can modify it if necessary.
Is there anything more I should know?
Fees are generally associated with mortgage offers that offer the lowest rates. You have the option of paying this upfront or adding them to your loan. Use a mortgage calculator to do the math for you if you want to see what your monthly mortgage payments would look like in different scenarios while factoring in other household expenses.
When can I begin the refinancing process?
The major lenders’ mortgage offers typically last six months while some lenders limit expiration periods to three months. It’s worth looking into a new mortgage agreement this far ahead of time since you’ll be able to lock in the rate you see now – at no cost and with no obligations.
By the end of 2021, the Bank of England stunned economists by raising the base rate to 0.25 percent. Despite a worsening cost of living crisis, the Bank raised rates to 0.5 percent just six weeks later. So, do you think we’ll see another rate hike in 2022? The Bank of England is trying to keep inflation low, predicting that it will hit 7.25 percent in April and average around 6% throughout 2022. To keep inflation under control, the Bank’s chief economist has cautioned that more interest rate hikes may be required. What effect does increasing interest rates have on inflation? By the end of 2022, some experts believe the base rate will have risen to 1.25 percent.
Rising interest rates will increase mortgage costs, making repayments more expensive and increasing the overall size of the home loan. Rising rates could also hit house prices. A one percentage point rise in the base rate could reduce house prices from between 2% and 11% according to Sir Jon Cunliffe, the Bank of England’s deputy governor. However many experts suggest that the UK housing market is robust enough to weather any rise in interest rates, especially with demand outstripping supply.