A mortgage expert has warned borrowers with mortgages agreed in recent weeks to check
Bob Singh(Image: Bob Singh/Newspage)
Borrowers who have secured a mortgage directly through their bank over the past month or so have been urged by an expert to take one crucial step, or risk needlessly spending hundreds or even thousands of pounds extra. Since the outbreak of conflict in the Middle East, mortgage rates have surged amid inflation concerns and the prospect of rising interest rates.
Those who have had a mortgage agreed in recent weeks will in many cases now be paying a full 1% more than they were at the end of February, if not higher. When applied to a mortgage, that increased rate can translate to hundreds or thousands of pounds in additional costs over even a two-year fixed rate period — and considerably more if the rate is fixed for five years.
Mortgage expert Bob Singh, founder of nationwide broker Chess Mortgages, said that while the situation in the Middle East remained volatile, there was a growing feeling that mortgage rates may have reached their peak.
Bob said: “This (past) week alone, we have had a number of major high street lenders, such as HSBC, Halifax, TSB and Santander reduce their rates, in some cases by quite chunky amounts. Though anything could happen when Trump is at the helm, there is cautious optimism that we may be past the peak for mortgage pricing.”
However, Bob cautioned that if rates do continue to fall and more competitive deals become available, borrowers should not rely on their lender to inform them that cheaper alternatives are now on the table.
He said: “Borrowers think their lender will always tell them if a better mortgage rate has become available, but that this simply isn’t true. People too often see lenders, especially the high street brands they are very familiar with, as touchy-feely. But that’s simply not the case.
“Lenders are deeply commercial organisations and are out to make as much profit as they can, so why would they tell you that you could now switch to a cheaper rate in their range before you complete? The answer is, almost always, that they will not.”
Bob urged borrowers to carry out the check themselves to establish whether more competitive rates have emerged with their current lender, or alternatively, to enlist a broker to handle this on their behalf.
He went on to say: “If you’ve got a mortgage agreed and haven’t completed yet, keep an eye on your lender’s rates, because if a better one becomes available, as is very possible based on this week’s reductions, there’s every chance you could switch.
“Alternatively, get a broker to do it for you. A broker can also scour the whole of the market and see if there are better rates with another lender, as you can always switch to them.
“When rates are edging down and you’ve not completed yet, it pays to monitor the market right up until completion, or get a broker to do it for you. It can prevent you from squandering hundreds or even thousands of pounds.”