If you’re due to remortgage soon, you might understandably be concerned about whether you’re going to face much higher mortgage bills when you move on to a new deal.
Compared to the record-low rates on offer a couple of years ago, borrowing remains comparatively expensive – but the market is much calmer after the periods of volatility seen in the past couple of years thanks to events such as Liz Truss’s mini-Budget and so-called “sticky” inflation.
One helping factor is that interest rates seem to have finally peaked, as the Bank of England chose to hold the Bank Rate at 5.25pc again following its most recent Monetary Policy Committee meeting, where it’s been since August. It will be held until at least May 9, when the next rates decision will be announced.
However, given Britain was found to be in a technical recession at the end of last year – which experts predict may already have ended – it was thought that the Bank Rate may take longer to fall than previously expected. As a result, some lenders have been increasing the rates offered on their mortgage deals – but usually only by small amounts.
The average two-year fixed-rate mortgage is currently 5.79pc, while five year deals are averaging at 5.35pc, according to data analyst Moneyfacts.
The likelihood of future Bank Rate falls hinges on wage growth and the consumer prices index (CPI) measure of inflation. CPI fell to 3.4pc in February, down from 4pc in January – with expert predicting it could reach its target 2pc by April. However, it may not be enough to convince the Bank of England’s Monetary Policy Committee to reduce the Bank Rate – it’s next decision will be announced tomorrow.
The Bank of England had increased the Bank Rate multiple times since December 2021 in a bid to bring inflation back down to its target 2pc. It’s stuck at 5.25pc since August 2023.
Use our calculator to work out how recent shocks to the mortgage market might impact your monthly payments.
