Make haste! Grab a mortgage deal now before interest rates rise

What’s the likelihood of interest rates increasing? How will mortgage lenders respond? And what do mortgage brokers recommend? Here are the answers.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

a young couple celebrate getting the keys to their new home by taking a selfie in the garden

Image source: Getty Images

Whether you’re a first-time buyer or a homeowner looking to remortgage, you might want to lock in that fixed-rate mortgage deal before the Bank of England’s Monetary Policy Committee (MPC) convenes on 4 November 2021. Why? Because there’s a good chance the Bank of England base rate will rise as a result.

Will that lead to mortgage lenders raising their interest rates? And what are mortgage brokers recommending? Let’s find out.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

[top_pitch]

What is the forecast for interest rates in Q4 of 2021?

ONS inflation statistics for the 12 months to August 2021 indicate inflation is rising. However, the latest release shows a 2.9% rise in the 12 months to September 2021, down from 3.0% in the 12 months to August.

Regardless of the slight drop, experts believe there will be a further increase to 3.2% in the short term, eventually rising to 4%. It’s expected that these further rises will be reflected in subsequent ONS inflation statistics releases.

Additionally, Andrew Bailey, governor of the Bank of England, acknowledged that the energy crisis and the upcoming Christmas festivities would push inflation to higher levels. This means that it’s highly likely that the Bank of England will raise the base rate during the next MPC meeting on 4 November 2021.

In fact, after analysing the market, investment experts see at least an 80% chance of interest rates soaring and at least a 55% chance that the base rate will increase.

[middle_pitch]

Will mortgage lenders raise interest rates?

Mortgage lenders have been undercutting each other, and the lowest mortgage rate currently available is 0.79%. Come next month, these offers might no longer be available if the Bank of England raises the base rate.

If you’re looking to take out a mortgage and your finances allow you to do so, now could be a good time to take the plunge before mortgage rates increase.

It’s pretty straightforward: if inflation continues to soar, the Bank of England will step in and raise the base rate. In turn, this will make bank-to-bank lending more expensive, and lenders will raise mortgage interest rates.

Come November, the chances are high that some mortgage lenders will begin announcing increases in mortgage interest rates.

What are mortgage brokers recommending?

First, keep in mind that we all have individual circumstances that set us apart. What might be a good deal for one person might not necessarily be ideal for another. So, it’s your responsibility to assess your financial situation to determine whether you can comfortably afford a mortgage.

Second, find out whether you can afford low-interest fixed-rate mortgage deals. You’ll notice that these deals start from 60% or 75% loan-to-value (LTV), meaning a larger deposit is needed.

Additionally, the most common fixed-rate mortgage deals run for two to five years. It’s your responsibility to find out which duration is ideal for your particular circumstances.

If a mortgage deal aligns with your needs and you’re financially ready, mortgage brokers are recommending taking the plunge before interest rates increase.

It’s also wise to consult an independent financial adviser if you’re unsure. This could help you avoid costly mistakes. You can also use the Motley Fool’s free mortgage calculator and debt-to-income ratio calculator to find out whether a particular offer is ideal for you.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »