In addition, the financial expert is sounding the alarm about the dangers of mortgage holders abandoning their fixed-rate deals early because they could face high exit fees. Fixed rate mortgages have a fixed interest rate for the entire term of the loan and are chosen by homeowners who want to know how much they will pay each month. The interest on the mortgage does not change during this period. However, fixed rate mortgages have increased for eight months in a row. Overall, the average fixed rate outstanding mortgage in the country is £161,774.
In light of recent interest rate hikes by the bank of england, many homeowners are desperate for better deals to help with their payments. However, Martin Lewis warns that these are “going away”.
While on BBC Radio 5 Live earlier today, the financial reporter explained how rare favorable mortgage deals for potential homeowners are. He also compared today’s rates with those of the past in October.
Mr Lewis explained: “The important thing to understand is that the cheapest mortgage deals are disappearing. If you’re on variable rate or have a fix that’s due to end soon, it’s a must to act now to see if you can save.
“Lenders reassess new offers every week, so the cheapest rates today could disappear tomorrow. A delay could be costly.
“In October, we had sub-1% fixes and we had hundreds of deals between 1 and 2%. Today’s cheapest two-year fix is 2.49%.”
However, the mortgage expert noted that over a five-year period, the cheapest solution is at 2.74%, while over 10 years it is 2.73%.
He added: “If you can visualize it, what we see is that you normally pay a decent premium to fix longer. But there really isn’t much bounty for fixing any longer right now.
“You can get a deal for five or even 10 years for not much more than the cost of a two-year fix. With further base rate hikes scheduled, today’s longer-term solutions may seem incredible in hindsight.
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“Granted, if what you want is peace of mind that things aren’t going to be dire in the future, then locking yourself up and locking yourself up for longer might help.”
However, Mr Lewis has warned the British public of the dangers posed by early exit fees which could prove costly for some.
“Although I am aware of the early exit fee on these trades, so you need to be sure that you will not move or ensure that the trade is portable, which means it could move with you,” said said the financial reporter.
“Ask your current lender what their current offerings will be.
“That’s if your dose is coming to an end or if you’re on a variable rate. This is called a product transfer.
“These days, because your existing lender can waive financial capability checks, if you don’t borrow more, it can work out well and there can be less paperwork and lower fees.”
Mr Lewis encouraged people concerned about potential hikes in their mortgage payments to visit comparison sites.
The financial reporter said: “Go to a mortgage comparison site to see roughly what in the wider market you can get.
: After that, compare it to your current offer.
“To put that into perspective, for an extra 1% interest on a mortgage that will cost you £600 a year more on a £100,000 mortgage, £1,500 more on a £250,000 mortgage and £3,000 plus on a £500,000 mortgage.
“It is important to make sure to keep this rate low. Acceptance is really difficult. Lenders perform both credit and financial capability checks.
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