Mortgage Rates Fall Slightly Despite The Forecasted Base Rate Increase
Mortgage rates have been slightly falling since November 2022 and continue to do so despite potential interest spiked in February 2023.
Rising inflation and economic turbulence pushed mortgage rates to new heights in 2022. However, they started to adjust and have been slightly falling since November 2022 as market settings stabilised. Interestingly, this trend is still relevant despite potential base rate increases in February 2023.
Interest Rates
The all-time highest base rate (17%) was recorded in 1979. However, most experts agree that we will not see such a figure any time soon. This year, base rates are set to rise to 4 or 5%, depending on the economic condition and inflation levels.
Despite the base rates spikes in 2022, mortgage rates readjusted and are currently falling. The main reason behind this trend is that mortgage rates spiked significantly following the mini-budget in September 2022. Two months later, lenders started lowering mortgage rates as economic conditions had become clearer.
Mortgage Tips
There are several things to consider getting the best mortgage deal if interest rates spikes again.
First of all, it is sensible to consider fixing your mortgage rates. However, if your current agreement has not yet expired, the early repayment charges (ERCs) might be involved, so it is critical to work them out.
If you plan to remortgage within the next six months, you can lock in a new rate now and switch to it after your current agreement expires to eliminate any ERCs. Typically, you can switch again in case of mortgage rates decline.
If you are concerned about falling mortgage rates, opting for a short-term deal might be a decent option. Also, some buyers choose variable-rate mortgages. However, SVRs depend on the base rates directly, so they are considered riskier.
Most importantly, new base rates spiked won't necessarily drive mortgage rate increases. Rates for many fixed and variable mortgages have been declining since November 2022 and are expected to do so in the coming months.
