Upheaval created by the war in Iran has pushed up the cost of mortgages for homeowners getting a new fixed deal.
For borrowers, the interest rate on a fixed mortgage does not change until the deal expires, usually after two or five years, and a new one is chosen to replace it.
The average rate on a two-year fixed deal was 4.83% at the start of the conflict, but rose to a peak of 5.90%, according to financial information service Moneyfacts. That has now dropped slightly to 5.81%.
A host of lenders have announced cuts in the last 24 hours, but brokers say that fixed rate rises in the coming weeks cannot be ruled out.
“The standard advice in uncertain economic times stands: secure a mortgage rate you think suits your circumstances or looks reasonable value for money as soon as you can, then try to switch to a cheaper deal with the lender before your mortgage is due to complete,” said Aaron Strutt, from mortgage broker Trinity Financial.
Savers will also be closely watching the outcome of the MPC meeting.
Interest offered on half of UK savings accounts can beat 3.75% – the current Bank of England benchmark rate – but it is usually those who have not switched provider for a long time who get the worst deal, according to financial information service Moneyfacts.
If prices rise sharply, then the buying power of those savings is diminished, especially if the interest received on those savings is poor.
