BORROWERS are paying more for mortgages as lenders up costs despite a cut by the Bank of England last month.
But one big provider has bucked the trend and today sliced mortgage rates for customers.
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Nationwide has dropped rates on selected mortgages by up to 0.12 percentage points across selected two, three and five-year fixed rate deals.
It comes as big banks that have recently upped rates include Halifax and Santander.
Clydesdale Bank has also increased rates on selected residential two and five-year fixed rates by 0.25%.
The Bank of England last month cut its base rate from 4.5% to 4.25%.
This would usually lead to falling interest rates across the board for borrowers.
However, the picture is mixed because of economic uncertainty and trade tariffs being applied by US president Donald Trump.
Discussing interest rates, Bank of England boss Andrew Bailey this week told MPs: “I think the path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty.”
The expectation of sharp interest rate cuts has been scaled back in financial markets.
Nicholas Mendes, mortgage technical manager at broker John Charcol, said: “Market expectations for Bank of England rate cuts have been revised down where four were previously priced in, two now feels more realistic, and even that’s not guaranteed.
“The broader momentum still leans towards rates staying higher for longer. That’s what’s driving most lenders to reprice upwards.
“Nationwide’s decision may reflect a different strategy whether that’s to stay competitive, manage pipeline volumes, or simply take a different view on short-term positioning.”
The confusion around the future of interest rates can make it difficult if you are coming to the end of a mortgage rate.
And many borrowers will be wondering whether it is better to fix for a shorter or longer time.
How long should you fix?
Trying to guess the path of interest rates is tricky and it’s best to focus on your individual circumstances.
Borrowers usually op for fixed rate mortgages to get peace of mind over repayments in the future.
Alice Haine, personal finance analyst at Bestinvest By Evelyn Partners, the online investment platform, said:
“Uncertainty reigns at the moment with mortgage rates shifting up and down in recent weeks.
“Preparing for all eventualities is key and the best strategy in an uncertain market is to employ the services of an independent mortgage broker.
“An adviser can not only hunt out the best deal for right now but can also keep an eye on rates and flag if better options have come online since the initial product was agreed.”
Borrowers coming to the end of a deal can lock into a new rate up to six months ahead of the start of a new mortgage term.
It means that you have the option to switch to a better rate should rates improve.
Keeping in touch with your broker after a mortgage has been agreed and before the term starts can help to ensure borrowers secure the best rate possible at that particular juncture.”
How to get the best deal on your mortgage
IF you’re looking for a traditional type of mortgage, getting the best rates depends entirely on what’s available at any given time.
There are several ways to land the best deal.
Usually the larger the deposit you have the lower the rate you can get.
If you’re remortgaging and your loan-to-value ratio (LTV) has changed, you’ll get access to better rates than before.
Your LTV will go down if your outstanding mortgage is lower and/or your home’s value is higher.
A change to your credit score or a better salary could also help you access better rates.
And if you’re nearing the end of a fixed deal soon it’s worth looking for new deals now.
You can lock in current deals sometimes up to six months before your current deal ends.
Leaving a fixed deal early will usually come with an early exit fee, so you want to avoid this extra cost.
But depending on the cost and how much you could save by switching versus sticking, it could be worth paying to leave the deal – but compare the costs first.
To find the best deal use a mortgage comparison tool to see what’s available.
You can also go to a mortgage broker who can compare a much larger range of deals for you.
Some will charge an extra fee but there are plenty who give advice for free and get paid only on commission from the lender.
You’ll also need to factor in fees for the mortgage, though some have no fees at all.
You can add the fee – sometimes more than £1,000 – to the cost of the mortgage, but be aware that means you’ll pay interest on it and so will cost more in the long term.
You can use a mortgage calculator to see how much you could borrow.
Remember you’ll have to pass the lender’s strict eligibility criteria too, which will include affordability checks and looking at your credit file.
You may also need to provide documents such as utility bills, proof of benefits, your last three month’s payslips, passports and bank statements.
