‘I’m fixing my mortgage for five years – here’s why you urgently need to do the same’

When Jess Collins, a 38-year-old writer from Cornwall, finally signed the paperwork for her mortgage at the end of June, it was a huge relief. 

“This was the hardest it’s ever been to get a mortgage, despite us being in a strong financial position,” she said. “Our mortgage adviser said he had seen so many people not even be able to get a mortgage because it was such a difficult market.”

Ms Collins secured a £250,000 mortgage and fixed the rate at 1.28pc for five years. Now other homeowners are racing to follow suit amid predictions of the biggest surge in mortgage costs since the financial crisis in 2008.

Markets expect a 0.5 percentage point rise in the interest rate of two-year fixed-rate mortgages to 1.7pc by the end of next year. An increase on this scale would add almost £50 a month to the cost of paying off a typical £200,000 mortgage. 

This would serve as an untimely blow for millions of borrowers already faced with soaring household bills.

Matt Coulson of Heron Financial, a mortgage broker, said there had been an increase in enquiries about longer-term fixed-rate deals from clients who believed the current low rates “couldn’t get much better”. 

“We have had a good few months of seemingly never ending rate reductions, but recently there has been a shift towards an increasing number of people questioning whether this is now the bottom,” he said. 

“We get asked a lot whether now is the best time to lock in and, whilst it depends on individual circumstances and will not be the best option for everyone, our response is: what is it worth to you in sleepless nights?

“Money worries are very common, so would you benefit from the security of being locked into a rate and not anxious over potential rate rises?”

Ms Collins is one those borrowers who have shunned the flexibility of shorter fixed-rate mortgages in favour of five and ten-year fixes, which are a safe haven against rate rises. 

She said: “I have always tied into a fixed rate with previous mortgages and it’s never worked for us. This is the first time it has been a good move and I feel we got a good deal. 

“We would be in trouble if the rates went higher as we already stretched to get the house. We locked in for five years to feel safe with the repayments and I’m so glad – it’s been worrying listening to the situation with rising rates.”

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