Homeowners looking for a mortgage deal face rising costs as banks and building societies are poised to continue upping their rates.
Nationwide Building Society is increasing the rates on new fixed deals by up to 0.45 percent while other lenders have also been upping their rates.
The Bank of England has been consistently increasing the base interest rate over the past year, with many people on variable rate mortgages seeing their monthly repayments go up as a result.
The central bank has upped the base rate in efforts to curb spending and reduce inflation, but the latest figures for inflation remain high at 8.7 percent.
The base rate is currently at 4.5 percent with some analysts predicting it could reach as high as 5.5 percent.
READ MORE: Millions of homeowners warned of ‘rule of thumb’ before remortgaging – ‘keep an eye out’
Nationwide has set out that first time buyers or those looking to move house will face increases of up to 0.4 percent on mortgages up to 90 percent and 95 percent loan to value (LTV).
People who are remortgaging will get a rise of between 0.05 percent and 0.5 percent on mortgage products up to 90 percent LTV.
Rates for switcher, additional borrowing and existing customers moving home will also go up, by between 0.05 percentage points and 0.45 percentage points. Shared equity rates will be raised by up to 0.45 percentage points.
Pav Masutes, founder of Masutes Group, told Express.co.uk people on variable rate mortgages should “brace themselves” for future repayment increases.
He said: “Variable rate mortgages are directly tied to the Bank of England’s base rate or other reference rates, so when those rates increase, the interest charged on the mortgage goes up as well, potentially putting a strain on a homeowner’s finances.
“For instance, let’s say someone has a £200,000 variable rate mortgage with an interest rate of 2 percent and the interest rate increases by 0.25 percent.
“This could result in an additional £40 per month, which may seem small, but over the course of a year, it adds up to £480, growing higher the larger the mortgage or initial interest rate.
“With the Bank of England set to possibly increase UK interest rates to 4.75, this means homeowners with a variable rate mortgage could see an increase of 1.25 percent on their payments already, making 2023 a costly year for their mortgage repayments.”
He said interest rates are currently predicted to peak at around five percent in September and then slowly come down over the rest of the year.
The expert said people looking to remortgage need to act as soon as they can to make sure they get the best deal.
He said: “First, homeowners should compare offers from different lenders to ensure they find the most favourable interest rates and terms as even a slight difference in interest rates can make a significant impact on monthly repayments.
“For example, let’s say someone is considering remortgaging their £250,000 property. By comparing offers from different lenders, they may find that even a 0.25 percent difference in interest rates can save them approximately £500 per year.
“Secondly, I would always recommend seeking guidance from a mortgage broker or financial advisor as they have expertise in navigating the mortgage market and can provide personalised advice tailored to an individual’s circumstances.
“They can also evaluate the available options and help individuals choose the most suitable mortgage deal.”
He also encouraged homeowners to review their current financial situation and look to improve their credit scores and reduce debts.
He said this is important as it can result in lenders offering better interest rates, which can mean a better overall deal even if interest rates go up.
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