A week on from the Bank of England raising its base rate, mortgages have become more expensive across the board – but is it still possible to get a cheap fixed rate deal?
After last week’s decision by the Bank of England to raise the base rate to 0.5%, lenders hiked up their standard variable rates (SVRs). But fixed-rate mortgage deals have also gotten more expensive – two-year fix offers, for example, have seen the biggest monthly rise in eight years.
Is this the start of major hikes or a temporary adjustment? Here, we look beyond the headlines and explain how you can still find a good mortgage deal in the current climate.
Fixed-rate deals getting more expensive
According to Moneyfacts, the cost of two-year and five-year fixed-rate deals increased by 0.12% this month – and in the case of two-year fixes, that’s the highest monthly rise since August 2009.
While it might seem that mortgage lenders are rushing to pass on extra costs to buyers, this trend has been bubbling away for some time.
Speculation over a possible base rate rise tends to push up swap rates – the rates banks charge when lending to one another – and thus the cost of fixed mortgages. Prices have been creeping up as early as the start of October.