Longer-term fixed mortgage rates may be set to rise

The rise in 10-year gilts, from a low of 0.527% in August to 0.98% last week, is being used by industry experts to predict a rise in longer-term fixed rates.

The rise in 10-year gilts, from a low of 0.527% in August to 0.98% last week, is being used by industry experts to predict a rise in longer-term fixed rates.

While lenders have continued to reduce their fixed-rate mortgage deals recently, a number of brokers believe that these deals have now bottomed-out. This, they say, is due in part to the increase in swap rates and the fact that the markets have already priced in any further potential cuts to the Bank of England base rate.

Theresa May leveled criticism at the Bank of England (BoE) last week, saying that its policy of printing money and low interest rates benefits only the wealthy.

Speaking at the Conservative Party, she said:People with assets have got richer. People without them have suffered. People with mortgages have found their debts cheaper. People with savings have found themselves poorer. A change has got to come. And we are going to deliver it.

Given the BoE’s independent status, May’s criticisms have been seen as out of place and an attempt to influence monetary policy. Downing Street has rejected these claims.

Regardless of whether the BoE were to continue with its policy of rate cuts, industry opinion is that a levelling-out in fixed rates is inevitable. Increases in rates are not predicted to be steep, because, according to Dominik Lipnicki at Your Mortgage Decisions, lenders are still seeking to reach their year-end targets and many are failing.

Fixed rates will go up in a measured way but for borrowers, it is as good a times as ever to remortgage,” he said.

Paul Winter chief executive of Ipswich Building Society supports this theory saying that lenders will not fully reflect any further base rate cut because it will be “unaffordable for them”.

He went on to say that building societies in particular would be loath to cut interest rates any further because of the detrimental effect it would have on savers, who are already suffering.

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