If you’re considering fixing your high value mortgage then now could be the time to act. That’s the view of leading experts following the withdrawal of several of the UK’s market-leading five year fixed rate products over recent weeks. With the country’s large mortgage market preparing for a rise in the base rate, many leading lenders have increased the cost of their medium term fixed rate deals.
Major lenders increase the cost of their five year fixed rate deals
Borrowers looking to lock in a long term fixed rate mortgage are being urged to act quickly to secure the best possible deals. Over recent weeks lenders including Santander, Natwest, Nationwide, Yorkshire Building Society and the Clydesdale Bank have all either increased the rate on their five year fixed deals or withdrawn these products altogether.
The Daily Telegraph reports that the best five-year fixed rate has risen from 2.44 per cent in July 2013 to 2.95 per cent now. Natwest’s deal is available to a maximum of 60 per cent loan to value and comes with a £995 fee while the Woolwich equivalent is also available to 60 per cent but has a £999 fee.
Islay Robinson, CEO of London mortgage advisor and high net worth mortgage specialist Enness Private Clients said: “While rates remain extremely low by historic standards they have started to creep up over the last few weeks. And, as a number of major lenders have made the decision to raise the cost of borrowing, other lenders have followed suit.
“With a Base rate rise looking increasingly likely for 2015, lenders have started to price this into their fixed rate deals and that’s why they have started to rise.”
Santander has recently increased its range of three and five-year deals by up to 0.15 per cent. This took its cheapest five-year fix from 2.99 per cent to 3.09 per cent. Natwest increased its five-year fix to 2.95 per cent while Nationwide increased its five year fixed rate by 0.10 per cent – taking its lowest five-year fix from 2.99 per cent to 3.09 per cent.
Yorkshire withdrew its leading 2.69 per cent five-year fix in January while Tesco Bank has withdrawn its 2.79 per cent deal without replacing it.
Borrowers urged to act now to secure the best fixed deals
Five year fixed rate mortgages have reached record lows in recent months thanks mainly to the Base rate remaining at 0.5 per cent and the Government’s Funding for Lending scheme, which allowed lenders to access cheap funds in return for increasing their mortgage business.
However, since the turn of the year the Government has withdrawn the Funding for Lending scheme for mortgages and swap rates have been rising, making it more expensive for lenders to access funding through the money markets.
Mr Robinson, the million pound mortgage expert, added: “While the Base rate isn’t likely to rise immediately it’s clear that the cost of long term fixed deals is on the way up. This means that anyone considering fixing their mortgage would be advised to act now rather than wait. “There is strong competition in the large mortgage market right now and so it’s still possible to find some excellent products.”