Urgent warning for homeowners as mortgage rates soar over 6% for five-year fix

HOUSEHOLDERS are being issued an urgent warning after the 5-year average repair rate spiked above 6%.

Moneyfactscompare.co.uk says a typical 5-year fixed-rate residential mortgage on the market today has a rate of 6.01%.

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This number is up from 5.97% yesterday.

The two-year average residential mortgage rate is now 6.47% – up from 6.42% the day before.

The average two-year fixed-rate mortgage jumped as high as 6.65% last October amid market volatility following the small budget last fall.

Mortgage rates then started to stabilize, but the average two-year fixed mortgage rate once again peaked at 6% in early June, for the first time in 2023.

Transaction rates have rebounded amid expectations that interest rates will need to stay higher for longer as the Bank of England tries to rein in inflation.

The central bank raised interest rates from 4.5% in May to 5% in June, the highest level in less than 15 years since September 2008.

Around 2.4 million fixed-rate transactions will close between now and the end of 2024, according to figures from UK Finance.

A new mortgage charter has been agreed to by lenders representing about 85% of the mortgage market.

Under the charter, lenders will allow customers who have updated their payments to switch to interest-only payments for six months or extend the mortgage term to reduce monthly payments. their.

Borrowers will have the option of reverting to the original term within six months by contacting their lender.

Borrowers will not be forced to leave their home without their consent, unless in exceptional circumstances, within less than a year of their first payment.

How to get the best deal on your mortgage

If you’re looking for a traditional mortgage, getting the best rate is entirely dependent on what’s available at any given time.

But there are several ways to get the best deal.

Usually, the larger the deposit you have, the lower the rate you can get.

If you’re on a mortgage and your loan-to-value ratio has changed, this can also help you access better rates than before.

Changing your credit score or getting a better salary can also help you access better rates.

If you have a fixed rate, you may see a higher interest rate at the end of the current term after the BoE rate increases.

And if you are about to close a fixed deal then you should look for new deals now.

Sometimes, you can lock existing transactions up to six months before your current transaction ends.

Leaving a fixed trade early will often come with an early exit fee, so you want to avoid this additional cost.

But depending on the cost and how much you could save by switching versus sticking, it might be worth paying to leave the deal – but compare the costs first.

To find the best deal, use a mortgage comparison tool to see what’s available.

You can also visit a mortgage broker so they can compare for you, but you may have to pay for this service.

It might cost a few hundred pounds but it could save you thousands of dollars on your mortgage overall.

You will also need to factor in the mortgage fee, although some do not or you can add it to the cost of the mortgage, but be aware that it means you will pay interest on it and therefore will cost more money. long-term.

You can use a mortgage calculator to see how much you can borrow.

Keep in mind that you’ll also have to pass your lender’s strict eligibility criteria, including an affordability check and a review of your credit record.

You may also need to provide documents such as utility bills, proof of benefits, last three months pay slips, passport and bank statements.

Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.

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