Mortgage rates could rise dramatically in the coming days, with landlords being urged to look at fixed deals.
This is according to mortgage brokers and City experts, who expect to see this year’s fall in rates reversed.
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Spike in swap rates
Medium and long-term swap rates, on which mortgage costs are based, have spiked following the US election, with five-year swaps almost doubling in price in the past two weeks.
Speaking to the Daily Mail, Simon Collins of mortgage broker John Charcol said: “Immediately after the Brexit vote we saw swap rates plummet, allowing lenders to cut mortgages left, right, and centre.
“But since late summer those money market rates have been steadily rising to reflect the growing uncertainty around the world.
“Trump’s victory last week has just added another massive uncertainty to the mix of political and economic unknowns, and it’s driving people to want to lock in to longer term fixed rates on offer today.”
Are we ‘at the bottom of the mortgage rate curve’?
Meanwhile in his latest briefing, Money Saving Expert’s Martin Lewis said: “It’s possible we are at the bottom of the mortgage rate curve. When UK base rates were cut from 0.5 per cent to 0.25 per cent in August, the thought was that they may drop again.
“But the economy’s stabilised so the Bank of England’s now indicating that’s less likely.”
Landlords’ remortgaging options may depend on the remaining loan-to-value ratio of their mortgage, with higher LTVs restricting the number of available deals.
However, with rates now at historic lows, and with City watchers predicting no further cuts, landlords may stand to save thousands by moving to a fixed deal.
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