Mortgage rates have generally been reducing since the end of 2023, however February has seen a general increase.

Major lenders including HSBC, Natwest, Nationwide and Virgin Money increased their rates in February.

Although the increases vary, they have been generally between 0.1% – 0.5% depending on the lender, the type of product and the loan to value (ltv) ratio.

The Bank of England Base Rate was held at 5.25% in the February Meeting. The Monetary Policy Committee is due to meet again on the 21st March. The outcome of this meeting and the ongoing data in respect of inflation will be of interest as this has had an impact on swap rates which ultimately affect mortgage rates.

Our Thoughts – Glass Half Empty or Half Full?

It wasn’t so long ago that average mortgage rates were beginning with a 6. Since the turn of the year, market leading rates were beginning with a 3 (late 3’s) and now they are early to mid 4s.

When average rates were beginning with a 2, an increase of 0.1 – 0.5% wouldn’t have made the headlines or caused too much concern.

Of course, interest rates are a sensitive subject at the moment, especially when you take into account other factors such as inflation and the cost of living.

However, a sense of perspective is important. Of course nobody wants to pay a higher rate, but as recent events have shown, trying to predict exactly where rates are going is difficult.

What’s most important is to make sure that your monthly mortgage payment is comfortably affordable, both now and in the future. Don’t be too put off by general statements such as ‘rates are going up.’ Find out exactly what it means to you in terms of monthly payments and stress test your disposable income against a further potential increase (for example, add another 1%).

Then you can make some informed decisions around your future plans with a ‘plan for worst, hope for best’ mentality. This gives you peace of mind by making sure you know that you can afford your monthly payments without necessarily putting your plans on hold.