Recent predictions about possible mortgage rate rises could be starting to crystallise, according to the latest product data analysis from Mortgage Brain.
While its six-month analysis shows the cost of mortgages to be levelling out – with a mix of small rise and falls – the past three months have seen increases in the cost of the majority of mainstream products.
Mortgage Brain’s product data (as of 1 January 2017) shows that the cost of a two-year tracker with a 90% LTV has gone up by 8% over the past three months. Similarly, a 90% LTV two-year fixed now costs 5% more than it did in October 2016.
Marginal increases of around 1% over the past quarter have also been recorded for 60% LTV two-year tracker and fixed mortgages, a 60% LTV three and five-year fixed, and a 2% increase for a 90% LTV three-year fixed mortgage.
In monetary terms, the 8% increase for the 90% two-year tracker equates to an annualised increase of £576 on a £150,000 mortgage, and a £342 annualised increase for the 90% two-year fixed product.
Despite this, however, Mortgage Brain’s latest data showing that the cost of the lowest rate five-year tracker (60% LTV) is now 18% lower than it was three months ago.
With a current rate of 1.79%, the reduction in cost for this product equates to a potential annualised saving of £1,674.
Mortgage Brain’s longer term analysis also shows strong year on year reductions spanning the past four years. The cost of a 90% LTV two-year tracker, for example, is now 19% lower than it was in January 2013. A 90% LTV two and five-year fixed mortgage are both 17% cheaper, and a 60% two-year tracker and two-year fixed are both 16% lower than they were four years ago.
Mark Lofthouse, CEO of Mortgage Brain, said: “It’s perhaps still a little too early to predict that mortgage rates are rising and that this trend will continue. However, our latest analysis is starting to show signs that we may finally be moving away from the long period of record lows in terms of mortgage rates and costs to a period of stability, or potentially, rises.
“While our long term analysis still shows that borrowers can benefit from a number of savings, with healthy cost reductions and low rates still available, there has been a clear shift over the past three months with cost rises across the majority of products analysed.”
