Mortgage Broker Advises 'Locking In' Rates After Bank of England Decision
Mortgage rates have experienced a sharp upward trajectory since the onset of conflict in the Middle East. Financial experts attribute this trend to the looming threat of heightened inflation, driven by escalating oil and gas prices. This economic pressure could potentially compel the Bank of England to increase the base rate in 2026, despite its Monetary Policy Committee's unanimous vote to maintain the current rate on Thursday.
Rising Costs and Borrower Anxiety
Many borrowers are understandably on high alert as daily announcements of rate hikes continue to inflate the costs associated with purchasing a first home or remortgaging an existing property. Notably, major lender Santander has implemented two rate increases this week alone, totalling a rise of 0.65 per cent.
In this challenging climate, Stephen Perkins, Managing Director at national mortgage broker Yellow Brick Mortgages, cautions against complacency. He warns borrowers not to simply hope for a future decline in rates, as such a decrease is not guaranteed in the near term, especially if inflation begins to climb as many analysts predict.
"People should not assume that the recent spate of mortgage rate increases is the end of it," Stephen stated. "There is every prospect in the current volatile environment that they will go higher. Prices at the pumps are already up noticeably since the war began, with oil prices comfortably above $110 a barrel. This will provide upward pressure on inflation, and the way the Bank of England controls inflation is by either keeping the base rate higher for longer or raising it. That's bad news for borrowers."
Proactive Strategies for Borrowers
Rather than adopting a passive approach, Stephen urges borrowers—whether first-time buyers or those seeking to remortgage—to take proactive steps. He highlights a strategic option: securing a mortgage rate up to six months before the new mortgage commences.
"Savvy borrowers will be aware that they can lock into a mortgage rate up to six months before their new mortgage begins," he explained. "That way, if the lender raises its rates even more, which is very possible in this extremely uncertain climate, they will be protected from those additional increases. So, even if you have missed out on the mortgage rates that were available a few weeks ago, you can still take a rate now before they potentially rise even further."
Borrowers can secure these rates independently or through a mortgage broker, who can provide guidance on the advantages and disadvantages of various mortgage products tailored to individual circumstances.
The Flexibility of 'Locking In'
Stephen emphasises that locking in a rate offers significant flexibility, allowing borrowers to "have their bread and eat it." He elaborated on the dual benefits of this strategy.
"The best bit about locking into a mortgage rate is that, if the situation in the Middle East does calm down and mortgage rates start to head south again, you can easily switch onto a lower rate with the lender you have chosen if its rates suddenly become more competitive," he said. "Almost all lenders will allow you to do that. You also, of course, have the option to switch to a better deal elsewhere, which is why brokers keep an eye on rates across the whole of the market."
In essence, securing a mortgage rate early provides a safeguard against further increases while simultaneously offering the opportunity to capitalise on cheaper rates should they become available. For informed borrowers, this approach genuinely presents the best of both worlds, combining security with potential savings in an unpredictable financial landscape.
