Mortgage rates skyrocketing

Borrowers are advised to review their deal against further rises.

Mortgage rates have more than doubled since the historic low of October 2021, data analysis by mortgage adviser L&C Mortgages has shown.

According to L&C, the average of the keenest low LTV two- and five-year remortgage rates from the top 10 lenders has continued to escalate this year, both well above 2% at 2.36% and 2.46% respectively, having risen from the historic lows of 0.89% and 1.05% respectively last October.

L&C’s remortgage tracker shows that the monthly payment on a typical £150,000 repayment mortgage is now more than £100 higher than the lowest it has been, pushing annual mortgage payments up by more than £1,200 p.a.

However, L&C noted that recent base rate increases have been feeding through to lenders’ Standard Variable Rates too. The average of the top 10 lender reversionary rates at the beginning of May was 4.34% and last week’s decision to hike rates again will see that increase further.

David Hollingworth, associate director at L&C Mortgages, noted that mortgage rates continue to change frequently as lenders are forced to constantly adjust and increase their rates in a fast-paced market.

“The market is moving at breakneck speed as lenders try to manage their product ranges and lending volume, often resulting in products lasting days rather than weeks. That presents a real challenge for borrowers trying to keep on top of market movements but with continuing increases in mortgage rates, it’s all the more important for borrowers to keep a tight rein on their mortgage,” he said.

Hollingworth pointed out that there are still impressive savings to be made over lender variable rates and those could grow as base rate looks set to continue an upward trajectory.

“Cutting the mortgage rate could help deal with higher living costs and build in security against further interest rate rises. However, increasing outgoings are also likely to feed into lender affordability criteria, so borrowers should seek help in pinpointing the best deal,” he said.

L&C said its Online Mortgage Finder enables customers to make a personalised search of thousands of deals from across the market to calculate how much they could save.

Written by: Houseladder