★★★★★

Rated Excellent

UK Property Finance

Price of Mortgages Predicted to Be £800 More Per Annum Than in October 2021

by | Mar 21, 2022 | Mortgages

According to mortgage advisor L&C, people looking to remortgage their homes are expected to pay, on average, an additional £800 each year when compared to just five months ago.

The analysis was based on several parameters, using the example of a homeowner who had 40% equity in their property and was looking to take on a 2-year fixed-rate mortgage over a 25-year period on a mortgage of £150,000.

Figures provided by the Bank of England showed that applications for remortgage products rose in the last quarter of 2021 in proportion to overall lending. Market experts indicated that homeowners remortgaging the properties were hoping to grab a good deal before interest rates rose further, as they are predicted to do in the coming months.

Interest rates from major lenders were used by L&C, which were averaged out to create the analytic report.

The data showed that in October 2021, with interest rates at an all-time low, borrowers would be paying a little more than £557 per month on a 2-year fixed-rate mortgage deal.

If the same homeowner were to remortgage now, they could expect to pay around £627 per month, which will equate to an extra £70 monthly, which is approximately an additional £840 per year.

In some instances, good mortgage deals are only made available to borrowers for a very short period of time, often just days, and are then removed from the market. What homeowners need to realise is that they can apply for a new mortgage up to six months prior to the end of their current mortgage arrangement.

L&C also stressed that offers from lenders are typically valid for 3 to 6 months, giving the borrowers “Rates are moving quickly, though, and deals rapidly come and go, often only lasting a matter of days before being replaced with higher rates. Sufficient time to make an application despite the fact that an ERC (early replacement charge) may stay in place for several months.

Associate director at L&C Mortgages, David Hollingworth, commented: “Mortgage rates have been shifting rapidly as lenders are forced to adapt to the impact of market expectations of higher rates on their funding costs.

“The sheer pace of change is something that could take borrowers by surprise, especially when the cost of living and other outgoings such as energy are already rising too.

“Fixed rates are still at historically attractive levels, so borrowers should review their current deal to make sure that they are on the best deal and protecting their position, especially against a backdrop of rocketing outgoings and further potential increases in the base rate.

“Borrowers can lock in at a current rate up to six months ahead, giving them the chance to review well ahead and ensure a smooth switchover when their current deal ends. That could help them get ahead of any further rate rises.”

Recent Posts

Key Housing Market Predictions for 2025

As we step into 2025, the UK housing market is poised for notable changes, particularly concerning mortgage rates. Recent analysis suggests a favourable shift for prospective homeowners and investors. Projected decline in mortgage rates The consumer body Which?...

How a Secured Loan Calculator Can Help You Make Smarter Financial Decisions

When contemplating a secured loan, the financial risks can be significant. Whether you're planning a home renovation, consolidating debt, or purchasing a vehicle, understanding your borrowing power and repayment terms is crucial. A secured loan calculator is a...

What is the Normal Completion Time for a House Sale, and Can Bridging Finance Speed It Up?

When buying or selling a property, one of the key milestones is the completion date, the day when the sale is finalised and ownership is transferred. However, many people are unsure about the typical completion time for a house sale and how they can potentially speed...

UK House Prices Rise to a New All-Time High as Mortgage Rates Fall

The average London price increased 3.5% to £543,308, its highest since November 2022, when it was £545,568. Falling mortgage rates have driven house prices to a new all-time high, according to fresh data from big lender Halifax released today. The average price of a...

House Prices to Rise in 2025 as Buyers Could Get Bigger Mortgages

One mortgage provider predicts that house prices might climb dramatically next year since declining interest rates will increase buyers' borrowing capacity. Based on latest data from the Office for National Statistics, MPowered Mortgages projects a significant...

NatWest Increases Rates, Surpassing a Key Benchmark

The news arrives as average rates for two- and five-year mortgages begin to rise. For the first time in three months, the average rates for the two most popular loan terms have gone up. The average rate for a two-year mortgage increased from 5.36% to 5.37% since last...

Top Questions to Ask Your Bridging Loan Lender Before Signing the Deal

Bridging loans provide fast access to funds when you’re purchasing a property, making renovations, or managing short-term cash flow issues. Before committing to one, it’s crucial to understand exactly what you’re signing up for. To ensure you make a well-informed...

Martin Lewis: A Trusted Financial Voice, But It Takes a Toll

Martin Lewis is dedicated to empowering people to take control of their finances and make their money work harder. Unlike many financial experts, he avoids assuming his audience has extensive financial knowledge. Instead, he communicates in clear, simple terms and...

Where to Find Bridging Loan Advice Online

When it comes to financing property purchases, bridging loans can be a valuable solution. Whether you’re buying a new home before selling your old one or need quick access to funds for an investment property, bridging loans offer short-term financial help. But knowing...

Homebuyers Feel The Property Market is Too Competitive.

According to Market Financial Solutions’ latest research, people who are looking to purchase homes are urging the government to take action on the highly competitive and stressful nature of the UK housing market. The speciality lender commissioned an independent poll...

Categories