Average rates across two and five year fixed products for property borrowers in the UK have crept up, according to a new analysis of available rates.
Borrowers on SVRs have been hit by hikes from a number of providers and home owners should be wary of future rises and look to fix, says MoneySupermarket.
The price comparison site research shows that average mortgage rates have begun to rise and coupled with the fact that a number of lenders have announced hikes to SVR rates which come into force on 01 May it is another blow for borrowers.
It found the average rate for two year fixes hit a low in October 2011 falling to 3.82%, the lowest figure since April 2009, but has now risen back up to 4.15%. This means a difference of £27.31 per month or £327.72 over the year for repayments based on a £150,000 mortgage. Similarly, five year fixed rates hit a low in January this year with an average rate of 4.57% but this has crept up to 4.72% adding an extra £12.81 per month or £153.72 over the course of a year.
For two year trackers, the average rate was at its lowest in August 2011 at 3.37% but now stands at 3.63%, hitting consumers with an extra £20.91 per month payment or £250.92 over the year.
There have also been a number of SVR rises announced by lenders recently which come into effect in May. Approximately one million customers will be affected by these increases announced by providers including Halifax, Co-operative Bank, Bank of Ireland and RBS/NatWest. Overall, the average increase to SVRs is 0.62% which will add an extra £52.58 to a £150,000 mortgage or £630.96 over the year.
'Mortgage rates are nudging upwards so anyone looking for a mortgage or whose mortgage deal will end in the next few months should act sooner rather than later to secure one of the current rates in case they rise further,' said Clare Francis, mortgage expert at MoneySupermarket.
'Borrowers paying their lender's SVR should also reassess their mortgage arrangements. One of the consequences of the low base rate has been the fact that SVRs have been similar to the rates on new mortgage deals and in some cases the SVR has been even lower. As a result an increasing number of people have opted to stick with their existing lender and move onto the SVR when their fixed or introductory tracker or discounted period ended, as opposed to remortgaging elsewhere. However, as around one million borrowers are about to find out next month, many SVRs can rise even if base rate doesn't,' she explained.
'Economists are expecting base rate to remain at 0.5% for the foreseeable future. A lot of people may therefore be happy to opt for a variable rate mortgage. Tracker mortgages are directly linked to base rate so any changes directly mirror moves in the Bank of England base rate. This is different to discounts which are linked to the lender's SVR, so given the forthcoming SVR increases; a tracker is a safer option,' she pointed out.
'If the prospect of higher mortgage repayments worries you, a fixed rate deal will give you peace of mind and protect you from interest rate increases for a set period of time,' she added.
SOURCE Propertywire
