Inflation soared to a 40-year high of 10.1% in July. This jump in cost of living is greater than what both the Bank of England and many economists were predicting.
As inflation is continuing to rise, it is likely that the Bank’s Monetary Policy Committee will increase borrowing rates again when they meet on the 15th of September. However, the nature of this month’s rise in inflation also increases the likelihood that the committee will hike the cost by 0.5% as opposed to 0.25%.
If you are coming to the end of your mortgage, you have around three weeks to secure a new one before the committee meets and new interest rates come into play.
Those of you on the standard variable rate may also want to consider remortgaging, average standard variable rates are currently around 5.17%, which is a lot high than the average 3.95% that you find on two-year fixed rate mortgages.
Unfortunately, all mortgages have been going up in cost since last December when the Bank of England started raising the interest rate. However, it is still possible to find better value mortgage deals. Currently five-year fixed rate mortgages offer the best value, having ony risen by 1.44% vs 1.61% and 1.65% increases for the average two-year fixed rate mortgage and the base rate respectively.
However, before choosing a five-year mortgage it is vital to make sure you won’t need to exit the deal early as you are likely to incur large penalty fees if you do.