Martin explained that the majority of the time, lenders will let you lock in new mortgage deals six months before your current deal ends – so you should start looking now
Martin Lewis has issued an urgent warning to people whose mortgage deals are coming to an end in December.
The MoneySavingExpert.com (MSE) founder shared the warning in the recent MSE newsletter. Martin said those whose mortgage deals are ending in December should start the “mortgage-switching prep now”. Martin explained that the majority of the time, lenders will let you lock in new mortgage deals six months before your current deal ends – so you should start looking now.
Martin noted that people feel it’s “counterintuitive” to lock into a new deal now, simply because the Bank of England may cut its base interest rate this summer. This would lead to mortgage deals dropping and people are cautious of being “locked” into a more expensive deal than they need to. However, Martin said this was not the case, instead it is “protection against the possibility of future rises”. If things do get cheaper, then Martin says you are usually “free to ditch it” and move on to another deal.
According to data from the financial comparison website MoneyfactsCompare.co.uk, as of today, the average two-year fixed residential mortgage rate today sits at 5.93% and the average five-year fixed is 5.50%. The average two-year tracker mortgage rate is 5.94% and the average standard variable rate (SVR) mortgage is 8.18%. In his newsletter, Martin says brokers are “hoping” for 4% fixes by the end of the year.
Mortgage deals are predicted to drop in the coming months as the Bank of England is set to cut its base interest rate in the coming months. Today it was confirmed that the UK’s rate of inflation dropped to 2.3% in the 12 months until April 2024 – this is 0.3 percentage points above the Central Bank’s target of 2%.
However, Martin noted this morning that the figure was at the “high end of expectations” and that the Bank’s target had not yet been hit. The Money-Saving Expert founder said this meant that an interest rate cut would likely come at the August meeting – rather than the next one on June 20. In a post on x – formerly Twitter – he said: “CPI inflation for down from 3.2% to 2.3% in April (so prices rose in year to April by 2.3%) This is at the high end of expectations, the Bank of England target has not been hit. It means an interest rate cut in June is less likely, August more likely.”