Daily Mail

Is this your last chance to grab a cheap mortgage?

- By Holly Thomas

HOMEOWNERS face a race to lock in to a cheap mortgage after the Bank of England warned the era of low rates is ending.

Mortgage rates have been at a r ecord low since official in terest r ates w ere slashed to 0.25 pc last summer.

But last week Mark Carney, Governor of the Bank, signalled tha t the base r ate could rise to 0.5 pc by next summer before reaching 1 pc or higher by mid-2020.

A hike could mean a sudden increase in monthly repayments for millions of homeowners on variable rate mortgages.

In September and October, more than £35 billion of fix ed home loan deals will move on to v ariable deals — the lar gest amount since 2012, according to the CACI Mortgage Market Database. Now experts warn that super-cheap mortgages could disappear, so you’ll need to act fast.

David Hollingwor­th, of broker L&C Mortgages, says: ‘Borrowers should be aware mortgage rates will begin to climb before the Bank of England moves rates, so they need to lock in before that happens.’

If y ou’re one of the thr ee million homeowners si tting on a standar d variable rate (SVR) — the default rate you are moved to w hen your fixed rate ends — you could sa ve hundreds of pounds a month by fixing.

The average SVR is 4. 6 pc, which costs £842 a month on a £150,000 mortgage. By comparison, Yorkshire Building S ociety currently has a tw o-year fix a t 0.99 pc, costing £565 a month — a £277 saving.

Two-year deals typicall y off er the cheapest rates on the mar ket an d are good f or those w ho know the y might have to move in the near future. However, by taking ou t a tw o-year deal y ou run the risk of ha ving to r emortgage at the same time Bri tain officially leaves the European Union. Experts say the uncertain ty surroundin­g Brexit may cause mortgage rates to rise, which is why an increasing number of people are opting for a five-year deal.

While they are a li ttle more expensive than two-year deals, five-year fixes are still competitiv­e.

The cheapest fi ve-year deal curr ently on off er is HSBC’ s 1.5 9 pc deal f or borrowers wi th a 4 0 pc deposi t. On a typical£150,000 mortgage your monthly repayments work out at £606 — £41 more than Yorkshire BS’s top 0.99 pc two-year fixed r ate. The total fi ve-year cost including a £999 fee is £37,375.

If y ou know y ou will not be mo ving house within the next decade i t may be well worth considerin­g a ten-year fix.

First Direct has a 2. 49 pc deal wi th no fee. This is £672 a month — just £66 more a month than the cheapest five-year deal. However, these deals can be inf lexible and have hefty early repayment charges.

nForthetop­mortgagera­tes, seeBestBuy­sonPage45,orgoonline­tothisismo­ney.co.uk/mortgage-finder

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