Homeowners are being warned to check current mortgage deals in preparation for expected hike in interest rates
Homeowners are being warned to check their current mortgage deals in preparation for an expected hike in interest rates on Thursday.
Experts predict that the Bank of England will announce a rise in the base rate of up to 0.75 percentage points, which could take it as high as 2.5 per cent.
In December last year, the base rate was just 0.1 per cent, but since then it has been climbing to help combat a rise in inflation, which now stands at 9.9 per cent.
Be prepared: Experts predict that the Bank of England will announce a rise in the base rate of up to 0.75 percentage points, which could take it as high as 2.5 per cent
David Hollingworth, mortgage expert at broker L&C Mortgages, says: ‘Homeowners should brace themselves for challenging times ahead. If you are currently on a fixed-rate deal that ends within the next few months, it might be wise to seek out a new offer now that you can switch to once your old deal ends.
‘Providers often allow you to tie into current offers for up to six months in advance.’ He adds that homeowners on competitive deals should consider overpaying now if they can afford to as mortgages are likely to get more expensive in the future.
Most lenders allow borrowers to overpay by around ten per cent a year without incurring a penalty.
Among the best five-year deals on the market is a 3.54 per cent rate from HSBC. It is for a 60 per cent loan-to-value mortgage with a £999 arrangement fee.
Santander is currently offering one of the most competitive two-year fixed-rate deals at 3.79 per cent for a 75 per cent loan-to-value, and it also attracts a £999 arrangement fee.