On 2 February 2023 the Bank of England’s (BoE) Monetary Policy Committee (MPC) again took the decision to increase the UK base rate, the 10th consecutive increase in a row. This increase brings the new base rate to 4%, an increase of 0.5%. The rate now sits at the highest rate it’s been since 2008.
Some economists believe that, despite a recent fall in inflation, additional increases in the base rate may be necessary to accomplish the MPC’s inflation target of 2%. The next decision will be made on 23rd March.
On whether you should fix your mortgage rate now, mortgage expert Kellie Steed at Uswitch.com said, “It may be worthwhile looking at fixed-rate options if you’re close to the end of your deal -or on an SVR. Whilst certainly not as attractive as they’ve been in recent years, at the current time, both two and five-year fixes are likely to be cheaper than staying on the lender’s SVR and potentially a discount rate, depending on the size of the discount.
“There has been a gradual reduction in two and five-year fixed rates throughout December 2022 and January 2023, however, it’s important to remember that the most attractive rates are only available to those with a substantial deposit or equity and a good credit rating.
“Those coming out of previous two, three and five years fixed-rate deals will still almost certainly see a rise in the rates available to them when remortgaging, albeit potentially a smaller rise than they would have seen if they had remortgaged back in November 2022.
“If you’re within the last six months of any type of mortgage deal at the moment, it’s absolutely worth speaking to a broker to look at the potential fixed-rate options available to you through a remortgage. It’s by no means a highly competitive market at the moment, and there is not much wiggle room with rates, but there are savings to be made in some circumstances, so it’s definitely worth reviewing the options available to you”.
“It’s possible to lock in a deal with most lenders up to six months before your existing deal ends, so it’s certainly worth locking in at the best rate available now – especially given the average length of a deal is now just 15 days in January 2023.
“If the pattern of falling fixed-rate deals continues, you can always opt for a better deal before your existing deal ends, should you find one.”