Martin Lewis has issued a warning over “disappearing” cheap mortgage deals after the Bank of England hiked interest rates last week.
The MoneySavingExpert founder is urging borrowers to “act now” if they’re on a fixed rate deal that will end soon, or if you’re on a variable rate.
It comes as the BoE hiked interest rates for the fifth time in a row to 1.25%. The base rate was 0.1% in December 2021.
Those on a tracker rate mortgage see their interest rates go up automatically in line with the BoE rate hike.
For those who are on an SVR mortgage, lenders normally pass on the full interest rate increase to you.
You'll usually be on an SVR type mortgage deal after your fix or tracker rate ends - with deals likely to be between 4.5% and 5.5% for most.
Fixed rate deals aren’t affected by base rate changes - but lenders have slowly been pulling cheap deals in recent months in anticipation of more rate hikes.
“Action now to check if you can save is a must,” explained Martin in the latest MoneySavingExpert founder.
“Lenders are repricing new deals weekly, meaning today's rates may disappear tomorrow, so delay may be costly.”
How to compare mortgage deals
If you think you’re overpaying on your mortgage, the first step is to ask your current lender if you’re on their best deal.
Next, use mortgage comparison tools that you can use to check whether you are on the cheapest deal.
We've got a guide on how to find the best rates here.
Once you’ve found the best rates on the open market, check how they compare to your current deal.
If you're thinking about making a switch, remember to factor in any other costs and check if there is an early exit fee associated with your current deal.
Martin explained how the lowest cheapest fixed mortgage deals right now are 2.49% over two years with Leeds Building Society.
He also flagged a fixed rate of 2.74% over five years with Santander, and 2.78% over ten years with Lloyds Bank.
This is based on a property valued at £120,000 for a mortgage, or borrowing amount, of £90,000.
Of course, the actual amount you could save by switching does depend on your property size, how big of a mortgage you have and what you're currently paying.
Interest rates are expected to keep rising as part of the BoE's plans to cool soaring inflation levels.
UK inflation climbed to 9.1% in the 12 months to May as the cost of living crisis continues to squeeze household finances.
CPI had already hit a 40-year high when it reached 9% the previous month, according to latest Office for National Statistics (ONS) data.
