Mortgage borrowers could soon have some relief from rocketing interest rates and the surge in repayments.
Kevin Roberts, managing director of Legal & General Mortgage Services, told Express.co.uk there are signs that rates are levelling off.
He said: “It is too early to tell whether rates are on their way down, but there is good news for borrowers in that swap rates – which are used by lenders to predict future interest rates – are starting to stabilise, dropping by 0.25 percent last week.
“It’s not clear whether rates have really reached their peak, but it does provide a glimmer of hope.”
However, analysts are predicting the base interest rate will continue to increase, which means repayments for people on tracker and variable rate mortgages will go up again.
Mr Roberts urged borrowers to make sure they understand what sort of mortgage they have and how it will be affected by future rates increases.
He said: “A tracker rate, for example, will rise in line with any movement in the base rate. A Standard Variable Rate (SVR) mortgage may also see a rate rise if the base rate climbs next week.
“To give an example, a homeowner borrowing £200,000 over a 35-year period could see an annual increase of £1,179 if their rate changes from five percent to six percent.
“Alternatively, for those on a fixed rate mortgage, the impact won’t be felt until they need to lock into a new product.
“Every borrower is going to be in a slightly different financial position and, depending on their circumstances, it is worth speaking to a mortgage adviser who may suggest paying off capital or adjusting the length of a mortgage term, which could help ease repayments.”
He also urged Britons to look at the broader context as rates have been very low over the past few years and are now closer to historical averages.
He said current five-year swap rates suggest mortgage rates could remain at around five to six percent “for the foreseeable future”.
The expert added: “Of course, we don’t have access to a crystal ball to suggest when rates will start to fall, but we do know that we have entered a new normal this year.
“I would urge any borrowers who are considering purchasing a home or remortgaging their current property to seek professional mortgage advice and discuss all the financing options available to them in this new climate.”
For the latest personal finance news, follow us on Twitter at @ExpressMoney_.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.
