The last couple of weeks have seen a spate of lenders increasing the rates on their fixed rate mortgages deals. Since the Bank of England left interest rates on hold on 7 May, lenders such as Yorkshire Building Society, Royal Bank of Scotland and Britannia have all been raising fixed rates.
After two months of no change in the Base Rate, it is likely that interest rates will remain at 0.5% for some time, but experts agree that they will have to start rising again at some point.
Swap rates (money market rates that lenders use to fund their fixed rate deals) have been creeping up in recent days – particularly for periods over five years or more. These rises have put pressure on lenders to increase the fixed rates they offer to borrowers.
With Bank Rate at an all time low, fixed rates are still very much in favour compared to variable ones as borrowers see an opportunity to lock into a low fixed rate before the Bank of England starts to increase rates again.
At L&C, we’re still seeing 9 out of 10 of all mortgages being taken out on fixed rates and we’re urging borrowers looking for a new deal to act quickly to avoid disappointment.