The Bank of England may have decided to raise interest rates by a quarter of a point at its November meeting – the first rate increase in a decade – but it has not heralded the end of cheap mortgage rates. While many lenders have increased their variable-rate mortgages – both standard variable rates and base-rate trackers – not all fixed-rate mortgages are becoming more expensive.
This is largely because the anticipated increase in base rate was factored into mortgage pricing ahead of the official decision, with most lenders hiking the cost of their fixed-rate deals in October on the back of higher Swap rates. Since the announcement, big high-street lenders such as Nationwide and NatWest have actually cut their fixed rates, highlighting the ultra-competitiveness of the market. Some lenders seem prepared to absorb rate increases into their margins, as they are still chasing business.
The plethora of new, challenger banks which have entered the mortgage market has also increased competition, which is good news for borrowers. With two-year fixed-rate mortgages starting from 1.23% and five-year fixed-rate mortgages starting from 1.79%, there are still some excellent deals to be had. As always, seeking advice from a mortgage broker is crucial, particularly if you are on a variable-rate deal and worried about rates rising further.