Despite the Monetary Policy Committee keeping rates at their historic low of 0.5%, many banks are increasing their mortgage rates, meaning exceptionally cheap deals won’t be around for much longer.
Currently the average rate a borrower pays on a 2-year fixed mortgage stands at 2.68% compared to 3.67% 18 months ago.
Jeremy Duncombe, director of Legal and General Mortgage Club, said: “Borrowers must not be complacent. The improving economic picture means a rise in interest rates is inevitable.
“Banks are already pricing in this increase so it is vital that they act now to get a good deal.
“Taking out a mortgage is the biggest financial commitment most people make so being properly informed about the options available is absolutely key.
“Speaking to an adviser is the best way to find out the products most suited to a borrower’s specific circumstances.”
For the average UK property, which is valued at £169,470, a rate rise of 3% would increase the mortgage bill by £1960.56 per year, as monthly payments would rise by £163.38.
Even a more modest interest rate rise of 1% would add an extra £63.99 to repayments per month, amounting to £767.88 per year.