Will June's expected interest rate rise mean mortgage rate rises?

Mortgage rates have significantly increased over the few weeks, given higher Swap rates that are driven by expectations of an increase in the base rate, so this looks to be a nailed-on hike, unfortunately. Fixed rates will probably not increase any more, as that increase has already been priced into what we see now, but other influences such as application activity, and inflation results, could still push rates higher in the short term. Those on trackers will feel that increase from July, and any variable or discounted deals will need to see how their lender reacts. This just underlines the need to speak to your broker early, make sure you are in a position to make a decision promptly, and secure what you can before rates melt in this heatwave. Time for the government to take different actions to reduce inflation, not just lumping it on the base rate and penalising borrowers (via the Bank of England, of course).

Given some of the increases we have seen since the inflation figures were released lenders have already priced in a minimum increase of 0.25 if not more in some cases. I don't believe anyone would be surprised if the BoE goes further than 0.25 in June given where swap rates are and combined with the latest inflation expectations. Given this increase over the last two weeks in theory we should not see mass panic from lenders as recently experienced. However, confidence has been hit significantly and the voting and minutes of the BoE meeting are going to be crucial in determining how the markets react. Should people fix it now? It entirely depends on their circumstances and that's why speaking to a professional adviser is key to giving the best advice tailored to them. We are seeing more purchasers taking the wait-and-see approach. The risk now is that recent events start a chain reaction that slows the market as buyers and sellers have a Mexican stand-off on house prices.

The next base rate hike has already been factored in by most lenders so we may not see a general mortgage rate rise except to tracker and variable rate mortgages.

The speed at which some lenders withdrew their rates last week left many people wondering why that was. I feel the recent commentary that base rate may have to rise to 5.5% spooked many analysts who previously thought we wouldn’t cross 4.5% !

The doom and gloom peddled in the popular press isn’t helping the property market and some new initiatives are badly need to add some zest eg Help to Buy and more 100% schemes but the timing may not be right for these types of products

Rates have increased a fair bit over the last couple of weeks in anticipation of the 22nd June MPC announcement. The only increases I now expect to see are the usual ones where lenders are trying to manage service levels, so they increase rates to no longer generate as much business (as they won't be the cheapest on the sourcing systems). Whether or not to fix right now is entirely down to the individual and their circumstances along with their attitude to risk. There is no right or wrong answer when it comes to this, but I would say most clients we speak to are fixing for 2 years.

We have to remember that the only mortgages definitely affected by the Bank of England rises are tracker rates or any rate that is index linked to the Bank Base Rate. The other mortgage rates available are generally priced on Swap rates, also known as SONIA rates. There is a lot of volatility with these rates at the moment due to the uncertainty of the markets and economy. The best advice is to speak to a broker who will be best placed to give the right advice for your circumstances as this certainly isn't a one size fits all time. We know which lenders you can reserve products with, the lenders that give adequate notice of impending rate changes so that the customer is not pressurised and also, more importantly, which lenders will allow products and rates to be changed if the markets start to calm and rates decrease before your new mortgage starts.