You may have seen recent headlines stating that the Bank of England (BoE) has increased the base interest rate to 1.75%. This is the highest the rate has been in 13 years, and experts predict it could rise even further later this year.
This heightened base rate may be good news for savers, but how could this affect you as a borrower?
Here, you can find out why mortgage rates have been on the rise in recent months and how working with a broker could help you navigate these tough economic circumstances.
Mortgage rates have soared over the past year as the base rate has risen
In recent months, the BoE has increased the base rate in an attempt to combat creeping inflation. This, in turn, has caused mortgage rates to spike.
In fact, inflation, which stands at 10.1% as of August 2022, has roused the BoE to increase the base rate six times since December 2021, from 0.1% in March 2020 to the levels we’re seeing today.
This rate rise has had a knock-on effect on the cost of mortgages.
Source: the Times
The chart above from the Times shows that the average two-year fixed-rate mortgage in July 2022 was 3.74%, while the average five-year fixed-rate mortgage was 3.89%.
As you can see, mortgage rates have been climbing sharply in recent months. While this may seem slightly worrying at first glance it’s worth keeping in mind that, by working with us, we can help you obtain the mortgage you need.
Here are three compelling reasons why working with a broker could help take the stress out of the borrowing process.
1. They will help you source the best deal
Regardless of whether you’re borrowing for the first time, or simply trying to find a better deal for your existing mortgage, working with a broker could help you procure some of the best deals on the market.
With the prevalence of the internet and a plethora of different mortgage deals online, you may be considering just finding a deal yourself.
However, mortgage brokers work closely with many different lenders. This means that, alongside the vast array of different deals right across the market, brokers can also obtain deals that typically wouldn’t be available to individual borrowers.
And better yet, allowing a broker to help source a deal for you can take the stress out of finding and comparing the mountain of different deals available on the internet or your local high street.
Not only will this destress the entire process, but it’ll save you time too. In fact, as of 30 August 2022, there are 51 pages of results for first-time buyer deals on Money Supermarket’s mortgage comparison service alone.
So, you can see why having a broker help you find a deal instead of having to sift through countless pages of mortgage listings could lift a burden from your shoulders and give you the peace of mind you deserve.
2. Mortgage brokers can keep an eye out for limited deals
As mentioned, brokers have access to thousands of different deals across the market, including those that individuals may not be able to access directly.
You may be surprised to hear that not only can brokers source you a great deal, but they can also “reserve” them for you before they are withdrawn.
Mortgage deals can come and go very quickly – indeed Mortgage Strategy reports that the average time a mortgage will stay on the market is currently just 17 days.
To secure a deal, you typically need to submit a full application to a lender. With rates disappearing very quickly, would you be able to arrange everything in time on your own before a lender withdraws your perfect deal?
This is where mortgage brokers come in. Your broker can reserve a deal for you by securing funds on the interest rate you wish to obtain, even if that deal is later withdrawn or repriced. The lender will then give you a deadline to complete the transaction.
We can help you secure the mortgage product that best suits you, so you don’t end up missing out on an amazing deal.
3. Brokers can support you throughout the entire mortgage process
Once your broker has secured a deal for you, you’ll typically need to complete the transaction within three to six months.
If your mortgage offer expires before your transaction is concluded, you’ll usually need to find a completely new deal. If this happens, there’s a chance this new rate will be more expensive than your previous product.
When you work with a broker, they will support you throughout the entire process, which can help to ensure that you complete on time.
Consequently, working with us can take all the stress out of the process of obtaining a mortgage. Not only will you be able to rest assured that we will be able to help you secure your deal before it expires, but a little support can go a long way in alleviating the stress involved with concluding the transaction.
Get in touch
Obtaining a mortgage can be a stressful process, especially when rates are rising and lenders are withdrawing deals with little notice.
If you’re looking for a new mortgage in this tricky environment, we can help. Email enquire@london-money.co.uk or call (0207) 808 4120 to find out more.
Please note
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.