Money-saving guru Martin Lewis advises homeowners with long-standing mortgages to get a fixed-rate deal now, before rates rise sharply. The financial expert predicts that rising mortgage rates will contribute to the ever-growing cost of living crisis, so he aptly offered his latest advice in his recent Money Saving Expert newsletter.
Martin in turn explained that the cheapest fixed deals were now double those available in October, as reported by the Liverpool Echo. More than 50 mortgage providers were offering rates below 1% just five months ago, while the cheapest offer on the market today stands at 1.79%, reports Wales Online.
This is a difference of £800 per year on a mortgage of £150,000. The TV host also warned that “things are likely to get worse” following the Bank of England’s decision to raise UK interest rates from 0.5% to 0.75%.
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Industry analysts Capital Economics expect this to rise to 1.25% by the end of the year and 2% in 2023. Lewis estimated that mortgage rates would still compare favorably when looking at previous decades, but, with households feeling the pinch on utility bills and at gas pumps, he advised people to act quickly to avoid being drained of more cash to keep a roof over their heads.
He said: “Although mortgage rates have increased, in a longer historical context they are still cheap. This is especially true for the cheapest and longest solutions which are currently only a little more expensive. than shorter ones and provide much longer certainty.
“This means anyone with a mortgage that is not already locked in at a decent rate for the foreseeable future should check to see if there is a better deal. Even if your deal ends in six months, there are options to lock in a rate.
“Lockdown may result in a non-refundable booking fee of £100 to £250. Yet with interest rates set to rise further, you could see lockdown as a form of insurance policy by getting a cheaper rate now, in case they are much more expensive when you come to remortgage.”
The following Money Saving Expert tools are also designed to help you choose the right mortgage for your situation:
The full edition of the Money Saving Expert newsletter can be read here.