📢 Mortgage News Alert: Rising Mortgage Costs and the Variable Rate Conundrum 📈
Homeowners brace yourselves as mortgage costs continue to climb amid expectations of further increases in the Bank of England's base rate. For those considering remortgaging, the options are far from appealing, with nearly 40% of existing fixed-rate deals expiring before 2025, many of which are currently below 2%.
However, the current market landscape presents a different picture. The average two-year fixed rate has surged to 6.51%, and no major lender offers rates below 5%. At the same time, the average rate on a two-year tracker mortgage stands at 5.96%.
As experts weigh in, the debate around variable mortgage rates intensifies. Variable rates include tracker rates, discount rates, and standard variable rates, each with their unique pros and cons.
While trackers follow the base rate set by the Bank of England, standard variable rates are subject to lenders' discretion and can rise or fall independently. At present, it's estimated that around 773,000 borrowers are on an SVR mortgage, which often carries higher rates compared to fixed or tracker alternatives.
Determining whether a variable rate is a wise choice hinges on predicting the movement of fixed rates. Financial advisers emphasise considering one crucial question: If rates don't decline and continue to rise, can you still afford to maintain your home?
With the markets projecting the Bank of England's base rate to reach 6% by mid-next year, the future remains uncertain. Experts advise potential borrowers to explore options, consult mortgage brokers such as Mortgage321, and carefully weigh the benefits and risks before committing to a variable rate.
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