MORTGAGE brokers have warned borrowers due to remortgage or buy in the next six months to lock into a rate at the earliest opportunity as failure to do so is “a dangerous game” that could end up “costing you a fortune”.
The warning follows traders betting on the base rate rising a full 1% in 2026 as the Bank of England seeks to control inflation caused by the war in the Middle East.
On Thursday of last week, Threadneedle Street unanimously voted for rates to be left on hold at 3.75% due to inflation uncertainty resulting from the war. At the end of February, in a dramatic contrast, markets had been pricing in a cut to Bank Rate.
Andrew Montlake, CEO at London-based Coreco, urged borrowers to act and not hesitate as doing so could cost them a lot of money.
He said: “With traders now pricing in a full 1% of rate hikes in 2026, we could see another round of mortgage rate rises from lenders in the days ahead. It’s starting to look bleak for borrowers and people should not hesitate to lock into a rate if they are due to buy or remortgage in the summer months.
“You are locking in to protect against future rate rises, but if, in the unlikely event that the war does end in the not-too-distant future, there will potentially be an opportunity to switch onto a lower rate before your completion date.
“Failure to act and lock in now could cost borrowers a lot of money given the direction rates are headed in. Do not hesitate, act.”
Only way is up
Omer Mehmet, Managing Director at Welling-based Trinity Finance, agreed: “Never has it been more important for borrowers to lock into a rate. We have had wholesale and hefty rates rises in recent weeks and another wave of hikes from lenders could be about to pound borrowers.
“My advice is lock into a rate at the earliest opportunity because, at present, it feels like the only way for rates is up.”
Emma Jones, Managing Director at Runcorn-based Whenthebanksaysno.co.uk, said “anyone who thinks that the mortgage rate repricing cycle is done for now is playing a dangerous game”.
She continued: “Trumpflation and a global energy crisis are now looking very real and the Bank of England will seek to contain the inflationary threat with rate hikes.
“The markets could be wrong on 1% of rate rises but, if they’re right, borrowers are suddenly looking very vulnerable as rates could quickly become punitive.
“It’s vital that people lock into a rate as that rate could be gone tomorrow in the current volatile climate. Even if we just get 2-3 base rate rises, that’s still a whole different borrowing landscape.”
Earliest possible opportunity
Adam Stiles, Managing Director at London-based Helix Financial Partners, warned apathy will cost a lot of borrowers.
He added: “If you are going to require a mortgage in the next six months, I cannot emphasise strongly enough the extreme importance of locking a rate in at the earliest possible opportunity to avoid your rate going higher.
“Don’t sit on the documents you or your broker needs to submit the application. It could end up costing you a fortune.
“If rates do end up coming down between now and when you need the mortgage then you should be able to pivot to a lower rate depending on your circumstances.”
Small movements matter
Martin Rayner, Director at Compton Financial Services, gave some practical tips.
He said: “If you go to a new lender, they will typically let you secure a new mortgage up to six months in advance of your current mortgage ending. Your existing lenders allow this, too, although many are closer to three months. It is important to check.
“In a rising rate environment, locking in early is key. It gives you protection now, but crucially you’re not tied in. If rates improve before your new deal starts, you can usually switch to the lower rate. That makes it a win-win, namely you’re covered if rates rise, but still benefit if they fall.
“Even small movements matter. On a £300,000 mortgage, just a 0.2% rate change is around a £1,200 difference over two years.”
Complacency will cost you
Craig Fish, Director at London-based Lodestone Mortgages, said: “Average two-year fixes have risen from 4.83% to 5.32% since the start of March alone and nearly 500 mortgage products have been pulled from sale as lenders react to surging swap rates. We’re not waiting for 1% of hikes to feel the pain, as borrowers are feeling it right now.
“This isn’t 2022 all over again, just yet, because in 2022 935 mortgage deals vanished in a single day. This repricing, while sharp, has been more orderly.
“Lenders are better prepared but, make no mistake, the direction of travel is the same and complacency will cost people dearly.
“My advice is simple. If you’re remortgaging or buying within the next six months, act now, lock in a rate, keep it under review, and switch if something better comes along before completion as most lenders will let you do exactly that.
“Don’t wait for the wave to break before you move. By then, it’s too late.”
