Rate rises could buck 5-year trend of cheaper mortgages

"That may still hold true this year but in the current climate rates are on the rise, so even if lenders are pricing as keenly as they can mortgage rates may well have risen further before the end of the year. 

"We’re tending to see borrowers look to lock in a deal earlier than they normally might as they’re aware of the sharp turnaround in rates and want to bag a deal now, even if they are as much as six months from their deal expiring."

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'We can't just look at interest rates'

Director at brokerage Private Finance, Chris Sykes, agreed the market often sees lower rates in the latter quarters of the year due to lenders having to be more competitive as the year goes on.

But even if interest rates are more competitive, Sykes said there are other things to consider. "Any difference in interest cost is significant, but I don’t think a buyer should make their decision on a property," said Sykes.

"When to buy based on a small interest rate variance throughout the year as if originally looking to buy in Q1 then deciding to buy in Q4 due to rate movements, they could perhaps save 0.08 per cent. 

"However, the property may have gone up in value 3 per cent, costing them thousands. Lots of factors go into buying a property. It isn’t quite this black and white."

Sykes said the same is the case for remortgages. "With remortgages, it is often either you refinance when your rate runs out or you’ll end up on a standard variable rate which costs you significantly more so you don’t have all that many options often," he explained.

Data analysed by Prosperity Wealth highlighted interest rates hit a five-year low in 2021, sitting at 2.09 per cent across all regulated residential loans.

YearInterest rate %

Interest rates of regulated residential loan for years 2017 – 2021

Many lenders made history last year, reducing rates to record lows at sub-1 per cent. But this year, brokers have highlighted the constant rate increases and withdrawals being put in place by lenders with just hours notice, keeping many of them up late into the night to secure the best rates for their clients.,