UK homeowners have been warned of a ticking time bomb. Martin Lewis has urged homeowners to prepare in advance and lock in a new cheap mortgage now to try and avoid higher interest rates.
The warning comes for those who already have a mortgage, as the cheapest rates have already nearly doubled since October 2021.
Andy McBride, Managing Director at Cleerly, agrees “As a business we are seeing more and more clients looking to remortgage on to new fixed rates to try and protect their payment against future interest rates rises. We are seeing lenders increasing rates on a regular basis with little to no warning”.
Affordability checks are beginning to bite
McBride continued “It’s not just the fact rates have been increasing. New mortgage applications are subject to affordability checks, this often involves a budget planner detailing your monthly expenditures. With bills rising and the cost of living increasing, household budgets are being ever more stretched, making it harder for applicants to meet the lenders affordability requirements”.
Leaving it late?
Many clients leave looking at remortgages to the very last minute – when their current deals expire or when higher rates are announced – but this can leave you exposed. Most lenders will produce a mortgage offer with a 6-month expiry date. Starting the process as early as possible will allow you to secure a low rate now and simply wait until your current mortgage expires.
The cheapest average two-year and five-year fixed rates are now well above 2 per cent at 2.36 per cent and 2.46 per cent respectively, having risen from the historic lows of 0.89 per cent and 1.05 per cent respectively last October. Mortgage rates are also widely expected to continue increasing with some economists warning of the base rate surpassing 2% by the end of this year.
What can you do?
William Coe, Senior Mortgage Consultant at Cleerly has this advice “my advice to any contractor with a mortgage rate expiring in the next 12 months is to contact Cleerly now. Whilst it may be too early to action any changes, we can discuss you situation, needs and look to build a plan around how and when we start the process.”
So what next?
“Factors such as you early redemption charges, product expiry date, property construction and contracting history can all be reviewed to ensure you get the very best option at the right time”.
Mortgage not due imminently?
For those clients that have more than 12 months remaining on their current mortgage product Cleerly run a Pro-Active Mortgage Management System (PAMM). Our PAMM system will monitor your situation and allow us to contact you at the opportune moment to ensure you have peace of mind that you will be contacted when you mortgage is due for renewal.
To discuss you mortgage requirements or be added to the PAMM system, simply call the team today.