Mortgage rates climbing: 'In 30 years I've not seen rates change this dramatically', says Northern Ireland mortgage advisor

Average fixed mortgage rates are continuing to climb, pushing up monthly repayment costs for homeowners across the UK, following the intervention of the Bank of England in the wake of the financial turmoil unleashed by the Chancellor Kwasi Kwarteng's so-called 'mini budget' last month.

Earlier this week, the average UK two-year fixed-rate deal topped 6% for the first time in 14 years and the average five-year fixed rate hit 6%. The average five-year fixed-rate mortgage is now 6.07%, having been 6.02% on Thursday and 5.97% on Wednesday, according to figures from Moneyfacts.

The News Letter spoke to several mortgage advisors about the situation facing Northern Ireland homeowners.

Helen Martin, from the Mortgage Advice Shop, said: "I'll give you a real world example of a client with a small mortgage. On the 13th of September, I sent her a letter with a rate of 3.54% for a two-year deal, and it was the same for a five-year. I sent her another letter on the 21st of September, and the rate had gone up to 4.34% and, today [Friday], her two-year rate is 6.1% and her five-year is 5.84%.

"If someone had a £100,000 mortgage, if we look at that five-year fix today at 5.84%, and let's say a 25-year term left, the monthly payments are £635. With that 3.54%, the payments would have been £503.”

She continued: "I have never seen the rates change so dramatically, in 30-or-so years.”

Brendan Carlin, from Foyle Financial, said: "Over this last two-or-three weeks I have had a lot of people getting in touch, worried about their fixed rates coming to an end and concerned about how much their payments are going to increase. People are forward planning.

“The trend has been that, since the financial crash of 2008/09, interest rates have been unusually low. Mortgage lenders, as a rule of thumb, tend to be about two percent above the rate set by the Bank of England. At the minute, they are more than that because lenders are factoring in the expected increases from the Bank of England."

Philip Strong, from the Mortgage Shop, said: "Offers are getting pulled and I think it's because lenders don't know how to price at the minute. We have noticed a rush of people coming here to our branches - people are panicking and they're trying to secure the rates before they go up again. We knew rates were going to go up, and we suspect they might go up again."

Mr Strong stressed, however, that there are options available. "There is still some value in discounted rates, as opposed to fixed rates. Those are rates which are discounted off the lenders' standard variable rate. People are panicking, and I understand why they are panicking if they've been given a shock with their bill going up suddenly as they come to the end of a fixed rate, but there is professional advice available. There are options."