Martin Lewis has issued a warning to everyone with a mortgage after the Governor of the Bank of England said that it 'will have to act' over the rising cost of inflation.
And while new and existing homeowners are currently enjoying a boom in super-low lending rates, the founder of MoneySavingExpert.com is predicting a “steep” rise for those with a mortgage that isn’t locked into a fixed-rate with their lender.
Writing in the latest edition of the MoneySavingExpert weekly newsletter, the financial guru said: “Mortgage rates are at all-time lows - some can fix at 0.84%. Yet that may be about to end. A UK rate rise is on the cards.”
On Wednesday, the Office for National Statistics (ONS) announced that Consumer price inflation (CPI) is now at 3.1%, down from 3.2% in August.
To help homeowners navigate the potential change, the consumer champion has shared a list of ‘mortgage cost-cutting’ need-knows, which you can read in full here.
Martin explained: “Back in April, there were no switchable mortgage deals below 1%, by June there were 10, today there are over 50 - with the cheapest fix being 0.84%. Yet with hindsight, we may look back and say this was as good as it got.
"On Sunday, the Bank of England's Governor said it 'will have to act' over rising inflation. For Andrew Bailey, that's as subtle as chucking a brick through a window, his way of telling people interest rate rises are likely coming.”
He also outlined how the market is strongly predicting that “rates will rise from today's 0.1% to 0.25% next month, then to 0.5% by February and 0.75% later next year” - however, he stressed that these projections are not always correct, but warned if that does come true “it will almost kick-start an increase in mortgage rates”.
Martin warned: “Put this together with possible UK base rates rising and it's highly likely change is a comin' - and possible mortgage rates could go up steeply and swiftly. So EVERYONE with a mortgage should check now if your existing deal is as good as it can get - and that applies double if you're languishing on your lender's standard variable rate.”
Martin Lewis top three tips for a mortgage switch
Find out your current mortgage details
The consumer champion explains that gather the following information will make choosing the right deal easier.
- What's the rate? Plus monthly payments and outstanding debt
- What type is it?
- When does the introductory offer end?
- When does the fixed-rate deal end?
- When must it all be repaid?
- Will you be penalised to switch deals?
- Does your fix or tracker have an early repayment charge? If so, Martin warns it isn't usually worth switching
- What's the loan-to-value (LTV)?
Find your existing lender's cheapest deal
Contact your existing lender to check what new deal it can offer you - this is called a 'product transfer'.
Do a market comparison
Compare the offer to the market's cheapest deal to see whether big savings are possible.
And if it all sounds too complicated, or you simply don’t have the time, Martin also suggests that a good broker can be worth their weight in gold as they can match you with lenders more likely to accept you.
He said: “Lenders are loosening some mortgage acceptance criteria - for example, some will now include bonuses and commission in your income assessment, which wasn't the case during the pandemic.”
You can read more about getting the best mortgage deal on the MoneySavingExpert.com website here.
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