Fix now to beat rising mortgage rates

If you're looking for a new mortgage between now and next March, here's why you should act now if you want a fixed rate.

The Bank of England Base Rate may have sat at 0.5% for over five years, but mortgage interest rates are now rising, particularly on fixed rates. So if you want a new mortgage in the next six to eight months, whether for your first home or a remortgage on your current one, you should definitely read on.

And if you’re on a standard variable rate (or SVR, to use the industry acronym) you might also want to take a look at what rates are doing right now. Recent research has shown that fixed rates are, in many cases, more competitive than SVRs.

See the latest mortgage rates and costs in our mortgage comparison centre

Why are rates rising?

An important thing to remember about mortgage rates is they don’t follow Base Rate religiously. In fact, they tend to move ahead of Base Rate. This is because they are mainly determined by what are known as ‘swap rates’, which are the rates at which banks lend to each other.

If the cost of that borrowing is rising, so too will mortgage interest rates, as lenders pass on the increase to customers.

It’s also worth remembering that mortgage rates have been very low due to the Funding for Lending scheme, which allowed lenders to borrow cheaply from the Bank of England providing they then lent that money out.

Why you should care if you want a new mortgage between now and next March

If you’re going to be looking for a mortgage over the next six to eight months, for whatever reason, it’s worth shopping around now. If you opt for a fixed rate, many lenders will hold that rate for up to six months, so even if it’s subsequently increased it won’t affect you if you already have a mortgage offer.

Top mortgages right now

Here are the top mortgage deals right now for a variety of different mortgage types and loan to values (LTV: the percentage of a property’s value needing to be borrowed). We’ve not just focused on the initial interest rate; we’ve also taken fees into account. As an example, we’re looking for a home costing £200,000 on a repayment mortgage repaid over 25 years.

With interest rates already rising and likely to rise higher, if you want certainty as to how much you'll need to repay each month you should consider a fixed rate mortgage.

Here are some top two-year fixed rate mortgages.

And here are some top deals for five-year fixed rates.

But if you want to take a gamble on rates not rising too dramatically in the short term, here are some top variable rates over two years.

And here are some top trackers, which are tied in directly to the Bank of England Base Rate. Many trackers allow you to move your mortgage without an early repayment charge – handy if the Base Rate does rise.

Don't forget your bank

It's also worth contacting the bank or building society you bank with to find out what they can offer. Sometimes existing customers get preferential rates. Make sure you shop around to find the cheapest deal for you.

See the latest mortgage rates and costs in our mortgage comparison centre

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