Brokers are being encouraged to consider longer-term fixed rates for their clients after a number of major lenders raised their rates during the past
Brokers are being encouraged to consider longer-term fixed rates for their clients after a number of major lenders raised their rates during the past week.
Halifax, Nationwide and Skipton are among the lenders that have increased interest rates as the market prepares for a possible base rate increase as early as November.
The moves follow an era of record low mortgage rates – and for customers who have been postponing locking in to a fixed rate deal, now could be the time to consider doing so.
Christine Newell, partner at Paradigm Mortgage Services, told FTAdviser: “We have been looking at the chance that the Bank of England rate is going to increase, and lenders have been putting rates up, so we have been saying now is the time to look at a fixed rate.
“So many people are avoiding the fact that rates have been so low and standard variable rates have not been moving. Now is the time, definitely.”
Ray Boulger, senior technical manager at John Charcol, said: “I think [brokers] should certainly be taking account of what is happening, but I would have expected them to be doing that for the last few years anyway.
“It makes sense to say to clients ‘rates are on the floor, they are not going to go any lower; if you want to get a fixed rate, you need to act now’.
“What it does is increase the reasons for giving that advice for those advisers not watching what interest rates are doing.”
Mr Boulger added that there was a “strong argument for a five-year fix for those that don’t want to move”, but that brokers should also consider the merits of 10-year fixes.
Martin Stewart, director at London Money, said: “We are in an interesting part of the cycle right now. We have had years of inertia and it is hard to shake people out of that. The argument for longer-term fixes more compelling now than at any time in the last six years.
“Swap rates have been going up and that has been driving lenders to raise rates. It requires a detailed conversation with the borrower as to what they want to do. If they are selling in two years, five years won’t be suitable.
“If they are confident they are happy to be there for the next five years, they would be very wise to look at current five-year money. Everyone’s circumstances are different.”
Jeremy Duncombe, director of Legal & General Mortgage Club, said: “Mortgage rates have been at an all-time low for quite some time now, so it is not surprising to see lenders like Halifax and Skipton make this move.
“For a long time, we have been encouraging consumers to review their finances by talking to an adviser and our position hasn’t changed. Customers seeking advice on their finances should speak to an adviser to better understand the wide variety of products and rates available on the market.”