The Bank of England have raised the base rate from 1% to 1.25% in an attempt to rein in inflation. With mortgage rates set to rise during the weeks ahead, we share five datapoints to help borrowers navigate the market.

• 1.25% - the new base rate

Thursday’s decision to raise the base rate was the fifth consecutive hike for the Bank of England and it’s unlikely to be the last. Consumer price inflation is running at its highest level for forty years and is showing few signs of slowing.

That’s underpinning expectations that the base rate could climb as high as 2.5% over the next twelve months, a level not seen since November 2008. The Bank is aiming to tighten policy enough to slow inflation, without sending the economy into recession.

Source: Bank of England

• 3.13% – the five-year swap rate, a leading indicator for the path of mortgage rates

Swap rates are financial instruments that offer a good leading indicator for mortgage rates. When swap rates rise, mortgage rates usually follow.

Swap rates across two-, three- and five-year timescales bottomed out in late 2020 and have risen steadily ever since. The uptick since November, when the five-year swap was at 1.18% has been particularly sharp, climbing to 3.13% as of late last week.

That suggests a rise in borrowing costs is around the corner.

• 3,374 – The number of products available to landlords

Mortgage rates might be rising, but borrowers are still able to choose from a large range of products. In the buy-to-let market, for example, there are now 3,374 products to choose from, up by more than 1,000 since the same time last year.

Product choice at higher LTVs is particularly strong. There are 79 products available at 85% LTV, the most since 2008.

Source: Moneyfacts

• 23,395 – The number of new and returning equity release customers in Q1, a new quarterly high

Take up of Equity Release products is rising rapidly. House prices have surged since the onset of the pandemic and many older homeowners are seeking to utilise that housing wealth to help family members amid a cost-of-living squeeze.

The average loan size is climbing, suggesting take up by wealthier homeowners is a significant source of new demand. Equity Release offers various tax advantages, and we’re increasingly seeing professional advisors place products at the centre of their financial planning strategies.

• 9 months – the length of time that certain mortgage offers are valid

Periods of rising interest rates can be stressful for borrowers and it’s always worth speaking to an experienced broker to see how to best position your finances.

Our brokers are in touch with lenders that allow borrowers to lock in mortgage offers for as many as nine months, which effectively isolates you from any further interest rate hikes for the duration of the mortgage term. If you can get a better deal after nine months, you can reapply.

If you are looking to buy a property or remortgage this year and would like to discuss your options, please do get in touch. We have access to over 200 lenders, and can help find the most suitable and cost-effective mortgage for you.