New analysis by the price comparison site, MoneySupermarket.com, has shown that average mortgage rates have begun to rise.
Coupled with the fact that a number of lenders have announced hikes to SVR rates which come into force on May 1, now is the time for borrowers to check they're on the most competitive mortgage deal.
The analysis by MoneySupermarket.com found the average rate for two-year fixes hit a low in October 2011 falling to 3.82 per cent - the lowest figure since April 2009 - but has now risen back up to 4.15 per cent. This means a difference of £27.31 per month or £327.72 over the year for repayments based on a £150,000 mortgage.
Similarly, five year fixed rates hit a low in January this year with an average rate of 4.57 per cent but this has crept up to 4.72 per cent adding an extra £12.81 per month or £153.72 over the course of a year.
For two-year trackers, the average rate was at its lowest in August 2011 at 3.37 per cent but now stands at 3.63 per cent, hitting consumers with an extra £20.91 per month payment or £250.92 over the year.
There have also been a number of SVR rises announced by lenders recently which come into effect in May. Approximately one million customers will be affected by these increases announced by providers including Halifax, Co-operative Bank, Bank of Ireland and RBS/NatWest. Overall, the average increase to SVRs is 0.62 per cent which will add an extra £52.58 to a £150,000 mortgage or £630.96 over the year.
Clare Francis, mortgage expert at MoneySupermarket.com, said:
"Mortgage rates are nudging upwards so anyone looking for a mortgage or whose mortgage deal will end in the next few months should act sooner rather than later to secure one of the current rates in case they rise further.
"Borrowers paying their lender's SVR should also reassess their mortgage arrangements. One of the consequences of the low base rate has been the fact that SVRs have been similar to the rates on new mortgage deals and in some cases the SVR has been even lower. As a result an increasing number of people have opted to stick with their existing lender and move onto the SVR when their fixed or introductory tracker or discounted period ended, as opposed to remortgaging elsewhere.
"However, as around one million borrowers are about to find out next month, many SVRs can rise even if base rate doesn't.
"Economists are expecting base rate to remain at 0.5 per cent for the foreseeable future. A lot of people may therefore be happy to opt for a variable rate mortgage. Tracker mortgages are directly linked to base rate so any changes directly mirror moves in the Bank of England base rate. This is different to discounts which are linked to the lender's SVR, so given the forthcoming SVR increases; a tracker is a safer option.
"If the prospect of higher mortgage repayments worries you, a fixed rate deal will give you peace of mind and protect you from interest rate increases for a set period of time."
Here at MDS Sutton, our mortgage comparison computer programs allow us to compare potential new deals with existing rates or what you are being offered. This takes into account the differences between interest rates and set up fees, so as to compare total cost. We don't charge for an initial consultation, so why not give us a call on 020 8652 9944 and see if you can save money?