How Often Do Mortgage Rates Change?

How Often Do Mortgage Rates Change?

A mortgage rate, or mortgage interest rate, is the rate of interest charged on a mortgage by your lender for borrowing money to buy a property. Mortgage interest rates are determined by each mortgage lender and the rate you are offered will depend on your individual circumstances. This can include how much deposit you have, or the type of mortgage you are looking for.

Mortgage rates can be fixed, discounted, or trackers. Fixed rates are usually set for a period of time, giving you stability in your monthly repayments. Discounted products are usually variable rates offering a discount on a reference rate, such as a Standard Variable Rate. Tracker mortgages commonly track an external reference rate, such as the Bank of England’s Base Rate controlled by the Monetary Policy Committee. The committee will meet to discuss the base rate and decide if any changes are needed. If the Base Rate changes, this can influence mortgage lenders to change their interest rates on mortgage products to follow.

If you have a fixed rate mortgage, your rate will stay the same for a set period of time. For variable rate mortgages, your rate can change during your product term, meaning your payments may increase or decrease.

Why Do Mortgage Rates Change?

Mortgage rates can change due to a number of reasons. One of the reasons is movement in the overall economy. When the economy is strong and inflation is on the rise, mortgage rates tend to increase. During periods of low inflation, mortgage rates tend to fall. This is a direct reflection of the costs to lenders to provide mortgage loans.

How Often Should I Review My Mortgage?

Although your mortgage deal might still be right for you, you may also find a better mortgage deal available. By reviewing your options and speaking to your lender, you may find you can get a better rate on your mortgage, meaning you could save money each month with lower repayments.

However, if you are in the middle of a mortgage product, there may be an Early Repayment Charge – your lender’s Mortgage Adviser’s will be able to determine if it is worth you considering moving to a new product. When your current mortgage deal is coming to an end, this is an ideal time to review your mortgage, as you will avoid any Early Repayment Charges at this stage.

Should I Remortgage?

Remortgaging means switching to another mortgage provider, without moving home.

Remortgaging may help you get a deal which is better suited to your current circumstances. For example, you may be able to get a better interest rate, or more flexibility with overpayments to allow you to pay off your mortgage earlier.

If you are coming to the end of your mortgage product term, you may look to remortgage to find a lower rate that could reduce your monthly payments, meaning you could pay less interest over the term of your mortgage.

If the value of your home has increased, you could benefit from a lower loan-to-value (LTV). The LTV is your outstanding mortgage amount in relation to the value of the property, shown as a percentage. Having a lower LTV could mean you are eligible for lower rates.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.