21/10/2021
Homeowners who are coming to the end of a mortgage deal are being urged to protect their finances by locking into a new fixed-rate loan.
A tsunami of higher energy and food bills, plus inflation heading towards four per cent, means key household bills are on the increase.
And with the Governor of the Bank of England, Andrew Bailey, warning that interest rates will be pushed up if higher inflation becomes persistent, mortgages are also likely to get more expensive. Bailey has not ruled out a rate rise before the end of the year.
Liz Hayes, Mortgage expert at Lakeview Financial Services Ltd, says talk of the need for interest rates to rise to curb inflation means now could be the right time to lock into a loan that will provide homeowners with payment certainty. She adds: 'Being able to lock down the cost of what is typically the single biggest household outgoing, at a time when other costs are climbing, will help build resilience into homeowners' monthly budgeting.'
Although banks and building societies have no shortage of funds to lend to borrowers – a result of record amounts of money being squirrelled away in savings accounts – Liz believes it is only a matter of time before mortgage prices start rising.
'The more the markets expect a rate rise, the more likely it will feed into higher funding costs for lenders,' she says.
'Lenders have been competing hard to make rates stand out, so profit margins have been cut to the bone.'
For most homeowners coming to the end of a current deal, a fixed-rate loan is the soundest option. It offers payment certainty as well as protection against rising interest rates which a standard variable rate, discounted rate or a tracker do not.
'You can fix a new deal six months in advance with most lenders,' she says.
To talk about your own situation please contact Liz on 07899 774416 or via Messenger
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