"The reality is that rates have been on the floor for a long time and they are not going to get any lower."
Predictions of a 0.25% increase in the bank rate are rife, having been fuelled by Bank of England Governor Mark Carney stating that he expects an interest rate rise in the ‘relatively near term’.
According to the Bank of England, 43% of homeowners are currently on variable or tracker mortgages, which opens up the possibility for millions of households to see an increase in their monthly expenditure in the lead up to Christmas.
Brian Murphy, Head of Lending at Mortgage Advice Bureau, commented: “An interest rate rise of 0.25% will take the bank rate up to 0.5%, which is still a very low figure. However, even just the hint of an interest rate change has already prompted a plethora of lenders including Barclays, Natwest, Nationwide, Halifax and Santander withdrawing some of the lowest rates on the market and a rate rise would undoubtedly have a further impact on product availability.
"For example, just two weeks ago, there were a number of sub-1% two-year fixed rate products available for remortgage customers, and by comparison just a fortnight later, we are now seeing lows of circa 1.12% for two-year fixed deals, together with similar increases across three and five fixed deals.
"Over the last decade many new borrowers have entered the market and they have never experienced an interest rate rise, with the last having taken place in May 2007. As a result, there is perhaps a level of apathy amongst some regarding the real possibility of a pending increase. The reality is that rates have been on the floor for a long time and they are not going to get any lower.
"So, for those who have been idling on a Standard Variable Rate, it really could be time to consider remortgaging as these deals are still close to the lowest ever levels. There is still time to get the application in before 2nd November, and for most people a remortgage is a fairly straightforward process and certainly not something to be scared of. Likewise, for those nearing the end of their current fixed rate mortgage deal or who are considering new borrowing, it may pay to contact their broker or lender to start the process sooner rather than later in order to secure a competitive deal.”
