Mortgage rates are rising again - what can you do to cut your costs?

Mortgage rates are rising again - what can you do to cut your costs? Barclays, Santander, Skipton, TSB and the Nottingham Building Society have all announced that they are increasing their mortgage rates this week Mortgage rates are rising again due to escalating conflict between the US and Iran. The US and Iran exchanged fire this week for the first time in a month, sparking fears that inflation could rise and interest rates may need to go up. UK swap rates have risen, which impacts the price of fixed rate mortgages. When swap rates are higher, banks increase the interest rates they charge on new fixed-rate mortgages. The latest turmoil has also led to a sharp rise in bond yields, due to a global bond sell-off. The yield - interest rate - on government gilts hit the highest level since the 2008 financial crisis last week This impacts mortgages as banks pass on the higher cost of borrowing to customers. Barclays, Santander, Skipton, TSB and the Nottingham Building Society have all announced that they are increasing their mortgage rates this week. It comes after HSBC and NatWest, hiked rates at the start of September. Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, warned that further increases could come, with more lenders are expected to review mortgage rates. But she said borrowers can still save money by fixing into a new deal now. She added: "Those looking to remortgage could do so around six months in advance by securing a product transfer with their existing lender, for peace of mind. "Securing a fixed rate deal compared to falling onto a revert rate is still wise, as around £230 could be saved each month in repayments.” The average two-year fixed residential mortgage rate is currently 5.65% and is at its highest rate since June 7, while the average five-year fix is 5.70% and is its highest since May 10. But Ms Springall said only a couple of lenders have withdrawn fixed rate mortgages from sale since the start of this month, compared to when many lenders pulled deals at the start of the Middle East conflict. She added: "While this alone might still not reassure some borrowers, it is worth noting that the pressure on swap rates over the past six months has not been caused by UK fiscal policy, which is why withdrawals and rate hikes are nowhere near the scale experienced in the aftermath of the ‘mini-Budget’ in 2022." How to save money on your mortgage You can normally start looking for a new mortgage deal three to six months before your current one expires. Start by using an online comparison tool, or by speaking to a mortgage broker, as they will often have access to deals that aren't available on the open market. You should also speak to your current lender to see what rates it can offer you. This is known as a product transfers, which is where you get a new deal from the same lender. When looking for a new deal, it is important to get all the relevant information about your existing deal - such as the rate you are on and your loan to value (LTV). This is the amount you are borrowing compared to the property's value.