Interest rates have finally fallen, and mortgage rates are beginning to fall as a result. However, is it wise to wait for better deals in the future, or should you take advantage of lower rates now and fix your mortgage ASAP?
This article will answer these questions and more so you can fully understand what to do with your mortgage. Helping you prepare for the future and securing a financially sensible deal, let’s jump in with predictions for interest rates.
Are mortgage rates falling?
The base interest rate is at a new low after years of increases under the Conservative government. This has led to many people pausing plans to buy their first home or delaying a remortgage. Why? Because they think rates will drop even further in the coming months, so a cheaper deal is just around the corner.
This is understandable, especially when the average fixed mortgage rate has dropped from 5.77% at the start of August 2024 to 5.43% in October. If you own a property worth £300,000, this could save you up to and £75 a month on your mortgage repayments, which is definitely not a number to be sniffed at.
However, while interest rates and fixed mortgage rates are falling, two and five year variable tracker deals have stayed fairly consistent. They have dropped slightly in the past month or so, but it isn’t clear what direction they’ll head in the near future.
What to do if you’re remortgaging
If your current mortgage deal is coming to an end, you should find a fixed rate sooner than later to avoid falling into your lender’s standard variable rate (SVR). Lots of homeowners are waiting to find a better fixed-rate deal in a few months, but you could pay so much more on a variable rate that it negates the savings you could make.
For perspective, the average SVR is between 7% and 8%, which is considerably more than practically any fixed rate deal available today.
An alternative to an SVR or fixed mortgage is a tracker mortgage. This puts you in a better financial position and gives you the opportunity to jump onto a fixed-rate option when the time comes. You may be liable to extra fees, however, so always check the mortgage agreement.
Extra charges can be avoided if you swap to a new deal with your existing lender and you may also be eligible for cashback with other lenders. This helps you make the move to a tracker or new cheaper mortgage in the future.
Be prepared
Never wait until your mortgage expires before thinking about your next move. Instead, start considering your options around 6 months before the end of your current deal. Locking down a deal early gives you security against rising rates and ensures you guarantee an agreement you’re financially comfortable with. Leaving it too late could see your dream deal expire and you could be left on your lender’s SVR.
So, timing is key, which is where expert advice comes in.
Conclusion
If your current mortgage deal is coming to an end within the next six months or so, the time is now to start thinking about switching.
Timing the market is tricky, so if you or your mortgage adviser finds a deal that works for you now, snap it up instead of waiting it out for the perfect deal. This can save you money both now and in the long run and provide crucial peace of mind around what can be a stressful time in anybody’s life.
For advice regarding your mortgage, contact the experts at Cedar House Financial. Call us on 020 8366 4400 or email enquiries@cedarhfs.co.uk for more information.