Money Saving guru Martin Lewis is advising homeowners with long-standing mortgages to lock into a fixed-rate deal now, before rates rise sharply. The financial expert predicts that rises in 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 the rate of those available in October, as reported by the Liverpool Echo. Over 50 mortgage providers offered rates less than 1 per cent just five months ago, while the current cheapest offer on the market stands at 1.79 percent, reports Wales Online.
This is an £800 per year difference on a £150,000 mortgage. The TV host also warned that 'things are likely to get worse' following the decision by Bank of England's to raise UK interest rates from 0.5 per cent to 0.75 per cent.
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Industry analysts Capital Economics forecast that would increase to 1.25 per cent by the end of the year and 2 per cent in 2023. Lewis reasoned that mortgage rates would still compare favourably when looking back at previous decades but, with households feeling the pinch on utility bills and at the petrol pumps, he advised people to act quickly to avoid being drained of more cash to keep a roof over their heads.
He said: "While mortgage rates have increased, in a longer historical context they're still cheap. This is especially true of the cheapest longer fixes which are currently only a touch more expensive than shorter ones, and give certainty for much longer.
"That means everyone who has a mortgage which isn't already locked in to a decent rate for the foreseeable future should be checking if there's a better deal out there. Even if your deal ends in six months, there are options to lock in a rate.
"Locking in can incur a non-refundable booking fee of £100-£250. Yet with interest rates widely expected to rise even further, you could see locking in as a form of insurance policy by securing a cheaper rate deal now, in case they're 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 circumstances:
- Basic mortgage calculator -including what it'll cost
- Compare two mortgages
- Compare fixed-rate mortgages
- Should you ditch your fix?
- How much can I borrow guesstimator
The full edition of the Money Saving Expert newsletter can be read here.
