Let’s talk about the Mortgage market
With 40% of fixed-rate mortgage deals expected to expire in 2022 or early 2023, what do you need to be aware of? In this article, we’ll dive into the status of the market and provide you with information to keep you up to date.
The current market
Mortgage rates are slowly starting to drop after a significant rise partially caused by the September mini-budget announcement. The average Two-Year Fixed Mortgage now stands at 6.22%, while a Five-Year Fixed Mortgage now sits at 6.03%.
While the market is recovering, lenders have issued statements indicating that recovery will take time as the mortgage market is affected by a range of factors.
Why is a slow recovery expected?
To a certain degree, fixed-rate mortgage deals are impacted by the base rate. As the Bank of England recently increased the base rate to 3%, lenders anticipate that recovery will not be fast.
Swap rates also impact the mortgage market as they influence long-term interest rate predictions. As swap rates are influenced by gilt yields which at the time of writing this article are relatively stable right now, lenders are starting to be able to offer better fixed-rated deals.
So, what does this mean for me?
As the average household is now likely to spend 27.9% of their income on their mortgage repayments if your fixed-rate mortgage deal is coming to an end then preparing yourself for higher monthly repayments could help to put you in a better financial position.
While we can’t advise if you should go for a fixed-term mortgage or stay on a standard variable mortgage, we can provide you with points to consider.
- Fixed-rate mortgages are protected from fluctuations in the base rate for the term of their fix, anyone who’s on variable rates including tracker, discounted variable or standard variable rates, faces more of a direct effect of any base rate increases.
- If the market does recover and rates decrease within your fixed-rate period, your repayments could be higher than current market levels.
- Due to an increase in the Bank of England’s base rate, the average variable rate mortgage is expected to rise.
For anyone interested in understanding more about re-mortgaging, click here to read this comprehensive guide.
All information disclosed in this article is subject to change. The information presented in this article is accurate as of 25/11/22.
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