In what has been a challenging year to say the least for the mortgage industry, some news will be more welcome than others for potential mortgage applicants. 

We have reported recently on how the mortgage industry in the UK is starting to show signs of bouncing back after a summer to forget for a whole host of reasons.

2020 generally has had the rug pulled from underneath it by the COVID-19 pandemic. The mortgage industry has, like so many others, had to make adjustments and changes in accordance with the state of play brought about by Coronavirus.

But as the market seeks to bounce back, some unwelcome news for anybody looking to secure a mortgage in the near future has come from the team at Moneyfacts.

They are saying that the average mortgage interest rates are on the rise, meaning the costs of paying off a mortgage is only going up for people. 

What do the statistics say?

The Moneyfacts UK Mortgage Trends Treasury Report found that for the past four months in succession, average mortgage rates for both two-year and five-year fixed rate mortgages have increased.

The average rates across all Loan-to-Value (LTV) amounts has increased since July according to the data. This means pretty much anybody securing a mortgage at present will be paying back at higher rates than they would have done in the middle of the summer when the pandemic was wreaking havoc. 

The average rates for two-year fixed rate mortgages with an LTV of 90% have increased from 2.57% in March to 3.76% in November 2020.

Average rates for five-year fixed rate mortgages with an LTV of 90% have also increased – this time from 2.91% to 3.98% for the same period.

The trend continues even for mortgages with lower LTV percentages. The average two-year rate for 85% LTV mortgages was just 2.11% in July according to the research. This is now up to 3.12%.

The data indicates that similar patterns are also in play for the average rates of mortgages with 80% and 75% LTV percentages.

This all means that mortgage interest rates are on a steady incline as the market seeks to bounce back from the pretty substantial obstacles it has had to face in 2020 thus far.

Is now a good time to go ahead with my mortgage application?

The rates across different LTV mortgage percentages have been steadily on the up, and this increase has been fairly consistent. That means that moving sooner rather than later could be in your interest, in order to secure a fixed-rate mortgage with a more manageable interest rate. 

This trend could continue for a fair amount of time as mortgage lenders seek to recoup some of the losses they made during the height of the COVID-19 pandemic. This means taking the plunge now and securing a competitive interest rate could save you money down the line.

Of course, it is hard to predict exactly what will happen next in the market given the year we have had. But Moneyfacts’ data shows that the increasing rates have been happening for long enough to be considered fairly consistent, and therefore unlikely to suddenly pivot 360 degrees.

Therefore playing the waiting game might be an appealing option, but if you have a reasonably pleasing mortgage interest rate lined up with a lender, delays could mean that rate changes to something less appealing given the general market trends. 

Should I stick or twist?

Each mortgage application is different, and these are pretty unprecedented times we are living in. 

What we would advise for sure is seeking expert advice from a trusted mortgage broker to help ensure you get the best bang for your buck and not miss out on the chance to secure a mortgage interest rate that ticks all your boxes.

Expert advice can be particularly advantageous in these tumultuous times for self-employed workers, including contractors and freelancers. Getting an understanding of which lenders offer favourable terms to self-employed workers can pay real dividends.

Everybody involved with the mortgage market will be waiting to see whether interest rates continue to increase. As a mortgage applicant, being a step ahead and understanding how the market is shaping up thanks to expert advice can help you save money and feel satisfied with the decision you have made.