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Beat the base rate rise by fixing your mortgage now

27th October 2014 Print

With the Bank of England Base Rate expected to rise over the coming months, homeowners coming to the end of their existing mortgage deal, or those currently on their lender’s Standard Variable Rate (SVR) should consider fixing now as the savings could mount up to thousands of pounds, says MoneySuperMarket.

The comparison site analysed mortgage data from the top five mortgage lenders by market share. The research found that homeowners currently on a lenders SVR could be better off by up to £4,649 if they switched to the market leading two year fixed rate mortgage offered by HSBC at a rate of 1.49 per cent.

For those who don’t want to move away from their existing lender, there are still significant savings to be made by switching to the best two year fixed deal it offers. Customers with Santander, for example, could make savings of as much as £4,357 over two years simply by switching from its SVR rate of 4.79 per cent, to its best two year fixed rate of 1.94 per cent. This includes an arrangement fee of £995. In addition, Santander mortgage customers would find their monthly mortgage payments decrease from £854 to £631.

Dan Plant, editor-in-chief at MoneySuperMarket said: “We know that a base rate rise is on the horizon, and while this may not be until next year, homeowners need to urgently consider their mortgage options while interest rates remain low. If you are already on your lenders SVR, or within six months of your current deal ending, don’t dawdle before starting your research. The minute base rate rises – and possibly even before - lenders will increase rates too, resulting in an increase in mortgage payments. If you want stability for your outgoings, fixing is the only way to protect against future rate rises.”

MoneySuperMarketalso analysed how costs may increase following a base rate rise of 0.25 per cent and 0.5 per cent showing substantial future savings by fixing their mortgage now. Assuming lenders will add 0.25 per cent on to the cost of their existing SVR rate, homeowners who fix now could save up to £5,177 over two years by switching to the same market leading two year fixed deal from HSBC. Similarly, if the base rate was to rise by 0.5 per cent, homeowners who fix now could save up to a huge £5,705 over two years.

Dan Plant continued: “By fixing now, homeowners would save thousands of pounds over the term of their new deal, and have bill certainty. Those who feel they are sitting pretty on their provider’s SVR need to start planning ahead to avoid a harsh landing. We have been in a low rate period for some time now, and many homeowners may not have previously experienced a rising rate market – they should prepare now to avoid a serious shock in the near future.”