Why are mortgage rates rising now?

• Before this week, mortgage rates had already been increasing throughout the year. The Bank of England sets the ‘base rate’, which lenders use to set their own mortgage rates. In January of this year, the base rate was 0.25%. Since then, it has gone up incrementally and is currently 2.25%.
• The Government sets the Bank of England an inflation target of 2%, but the current rate is 9.9%. It’s the Bank of England’s responsibility to make sure inflation is low and stable, so they need to bring inflation back down. The way they do that is by increasing interest rates.
• This is why some lenders have repriced deals and others have temporarily removed some or all of their products. Some of the lenders who have withdrawn products are expected to return with new deals in the coming days and weeks.

How might increasing interest rates affect my mortgage?

• If you’re a first-time buyer, moving home, or remortgaging, it’s likely you’ll be impacted by the changes. If you have a fixed-rate deal, the good news is that it will be business as usual, and your monthly repayments won’t change, at least until your current deal ends.
•  If you don’t do anything, at the end of your deal you’ll automatically move on to the lender’s Standard Variable Rate (SVR). These rates tend to be higher than other mortgage rates and are generally changed to reflect movements in the Bank of England’s base rate.
• Take a look at how your repayments would change if you have a 25-year mortgage term and are looking at a fixed-rate for £200,000, based on rates increasing from between 2% to 6%. 

Can I still get a fixed-rate mortgage deal now?

• Some lenders have withdrawn their fixed-rate products, while others have increased their prices in response to the rapidly changing costs of their funding. But it’s definitely worth finding out what your options are.
•  If you’re on a tracker or a variable mortgage, you could shop around to see if you can find a cheaper option with a fixed-rate mortgage. However, you might have to pay an early repayment charge first. You could speak to a qualified mortgage broker or adviser if you’re unsure which options would be best for your individual circumstances.

I’m on a fixed rate, what are my options when my deal ends?

• If your fixed-rate deal is due to end within the next six months, you could see what your options are for locking in a deal now.
•  Many lenders will allow existing customers to apply for new deals up to six months before their current rate ends without having to pay an early repayment charge. This is often called ‘product transfer’ or ‘switching’. This is a relatively easy process as you’re staying with your existing lender, so you won’t need a solicitor or a property valuation, and there’s no need to prove your income.
• If you’re looking to move lenders – whether you’re remortgaging or moving home – you may want to start well before your fixed-rate deal ends, as the application process can take several months or more.
• There is so much fluctuation in the mortgage market right now, you might want to look at what your lender has to offer or speak to a mortgage broker to find out which deals are available to you.

*Information from this post has been supplied from Rightmove' Please note: Rightmove is not authorised to give financial advice; the information and opinions provided in these articles are not intended to be financial advice and should not be relied upon when making financial decisions. Please seek advice from a specialist mortgage provider.*

https://www.rightmove.co.uk/news/articles/property-news/interest-rates-mortgages/