The days of five-year fixed rate mortgages below 5% in the UK could be coming to an end as fixed rate deals are set to become significantly more expensive, according to Leeds & Holbeck Building Society.
Contemplating recent increases in money market rates and the generally expected rise in the Bank of England base rate in November, Tony Burdin, head of marketing at Leeds & Holbeck, believes consumers are likely to see lenders re-price or withdraw fixed rate loans.
He said: “The UK has enjoyed a period of record low rates and these days are numbered. We have seen some of the biggest names in the lending market increase their rates on loans over this period and customers should look around for the best deals and, if they can, fix now.”
However, Ray Boulger, senior technical manager at Charcol, believes it is too late to fix: “I think fixed rates are close to the top of where they are going. If you accept the city’s interest rate forecasts of 5% this time next year, then fixes are not good value. Compare a five-year fix at around 5% with a good two-year discount or tracker, available at around 3.25%, it is a high premium to pay for a fix. “
Concerns about the resilience of the housing market and consumer spending pushed the Bank of England to the brink of a rate rise at the last meeting of the Monetary Policy Committee.