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Borrowers rush to fix mortgage ahead of possible rate hike

Written by: Paloma Kubiak
A lender’s seen a surge in the number of borrowers turning to fixed rate mortgages as speculation mounts over a potential Bank Base Rate rise next week.

Yorkshire Building Society has seen nearly double the volume of applications for fixed rate deals in just three months.

In August, it reported a ratio of fixed rate to variable rate mortgage applications of 35:1 but by October, this figure stood at 64:1.

The Yorkshire said this rise is in spite of all-time low variable rates – its two-year discounted standard variable rate (SVR) has an interest rate of 0.87%.

Speculation has been rife that Bank of England Governor Mark Carney would be pushed into raising the Base Rate given the current environment of higher inflation and better-than-expected GDP figures, in spite of weak wage growth.

The Bank of England’s Monetary Policy Committee decision on interest rates will be announced at noon on Thursday, 2 November.

But homeowners are already making a decision on which way rates will go, choosing to fix their mortgage sooner rather than later.

Simon Broadley, senior manager at Yorkshire Building Society, said: “With increasing speculation that the Bank of England could trigger a rate rise next week, our data indicates borrowers are keen to secure a deal before any potential increase.

“Despite having the lowest ever variable rate mortgage on the market, our findings demonstrate that borrowers value being able to lock-in to a fixed rate deal and know that their monthly payments won’t change during their initial term.”

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