Homeowners urged to do 1 thing to protect finances | Personal Finance | Finance
Homeowners are being asked to do just one thing to protect their belongings finance While hundreds of mortgage deals are being withdrawn from the market. Mortgage rates are rising amid changing market expectations driven by the U.S.-Israeli war with Iran.
The average two-year fixed-rate homeowners mortgage on the market rose to 5.35% from 4.83% at the beginning of March, according to financial information site Moneyfacts. The average five-year fixed homeowners mortgage rate rose to 5.39% from 4.95% in early March. Mark Harris of mortgage broker SPF Private Clients said: Times Borrowers should act now and secure an interest rate if they will need a mortgage within the next six months.
Adam French, Head of Consumer Finance at Moneyfacts, said swap rates underpinning mortgage pricing had risen sharply following the Bank of England’s decision to keep the base rate at 3.75%.
He said markets interpreted the Bank’s comments as leaving the door open to interest rate hikes amid “Trumpflation” fears.
Mr French added: “With two- and five-year swaps currently at their highest level in more than a year, lenders are once again facing higher funding costs, which will be reflected in mortgage prices.”
A quicker end to the conflict in the Middle East could ease pressure on interest rates, but in reality a more unstable world is a more expensive world, the expert said.
He added: “While the most competitive deals remain below average, anyone looking to buy or remortgage this year should be prepared for higher costs than previously expected.”
The bank kept interest rates unchanged at 3.75% after all nine members of the Monetary Policy Committee (MPC) voted to keep rates steady on Thursday.
Just a few weeks ago a 3.5 percent cut seemed almost certain, but the start of the war on February 28 appears to have dashed hopes for an imminent cut in interest rates as inflation is set to rise.
Consumer Price Index (CPI) inflation fell to 3% in January and MPC forecasts in February showed this rate falling towards 2% from April, largely due to the Government’s efforts to reduce household energy bills.
But all of these predictions are now out of date as the conflict in the Middle East has caused oil and gas prices to soar, increasing the cost of living in the UK and many countries around the world.
MPC expects inflation to be around 3% in the second quarter of 2026, down from February’s forecast of 2.1%. The committee anticipates a potential increase of up to 3.5% in the third quarter.
Some members of the MPC have signaled that rates may have to rise in the event of a protracted conflict, but added that such a move would not be rushed.
