Rates increasing despite the recent Bank Rate cut

A question that many people are asking - why have mortgage rates gone up after the Bank of England chose to reduce the bank rate to 4.75%?

The recent Autumn Budget and the US elections may have something to do with this as they have added a little uncertainty around which way rates are going. This has unfortunately resulted in most fixed rates increasing.

Another contributing factor are swap rates which mortgages are indirectly linked to, as well as lenders looking into their plans to balance their efficiency and profitability.

What is going to happen to fixed-rate deals?

Last month saw rates as low as 3.75% (five-year fixed) during mid-October. However, the majority of these sub-4% deals have now been pulled. Despite this unwelcome news for borrowers, it is important to remember that we haven’t had any signs for rates to drastically increase. We are still expecting the base rate to fall over time, the market is just unsure how fast this will be.

Another reason rates may reduce is of course if demand for mortgages slow down. The hope is as the market settles then rates may continue to trend downwards.

Should you fix now?

It is important to remain proactive when securing your mortgage rate.

“Our message remains consistent – secure a rate at the very earliest point, protecting you from the volatility, and then review this rate regularly to take advantage of any reductions or shift in the perception of the market.” – Craig Head, Director.

Speak to our friendly, professional advisers at Mortgage Required for bespoke advice: 01628 507477 or email team@mortgagerequired.com.