Borrowers should not be complacent over rates, warns L&G

Legal & General Mortgage Club has today warned consumers not to be caught out by rising interest rates.

Related topics:  Mortgages
Amy Loddington
17th June 2014
Mortgages

Although the Monetary Policy Committee has once again kept the base rate at 0.5%, many banks are already increasing the rates they offer borrowers.  This means that the historically low mortgage deals now available won’t be around for much longer.  The average rate for borrowers on a two year fixed mortgage is currently 2.68%, compared to 3.67% for the same product 18 months ago.

Legal & General analysis shows that for the average property in the UK, which is valued at £169,470, a 3% increase in interest rates would increase monthly payments by £163.38, or a significant £1960.56 over a year. Even a more modest interest rate rise of 1% would add an extra £63.99 to repayments each month or £767.88 per year.

Jeremy Duncombe, Director, Legal & General Mortgage Club says:

“Borrowers must not be complacent. The improving economic picture means a rise in interest rates is inevitable.  Banks are already pricing in this increase so it is vital that they act now to get a good deal. Taking out a mortgage is the biggest financial commitment most people make so being properly informed about the options available is absolutely key. Speaking to an adviser is the best way to find out the products most suited to a borrower’s specific circumstances.”

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