Over the last six months, the cost of fixed rate mortgages has risen sharply and will carry on doing so as a rise in the base rate becomes even more imminent.
The average cost of a five year fix now stands at 5.45%, the highest it has been since last August. The average three year fixed rate home loan is now 5.05% and you’ll be paying an average of 4.49% for a two year fix.
Although the base rate is still at 0.5%, some mortgage lenders have increased rates by more than that amount since the beginning of the year. For somebody with a £150,000 mortgage, a rise of 0.5% equates to an additional £42 in monthly repayments.
The Bank of England MPC meets today [Thursday] to decide whether interest rates will remain at their all time low for another month. But with lenders already upping their rates in anticipation of a rise, mortgage hunters may well want to act quickly and snap up a cheap rate whilst they still can.
Meanwhile, will you be able to pay off your contractor mortgage before your planned retirement date?
Latest research shows that many people have to defer their retirement because it’s taking longer to pay off their existing mortgage. Add to that the fact that the average age of first-time buyers is increasing because of stricter mortgage lending requirements and the problem could get worse.
Time was when people were mortgage free for a while before they retired, giving them a golden opportunity to save some money to fund their retirement. Since the 1960s, this window has more than halved and therefore the chance to build a nest egg has got smaller.
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