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Mortgage rates: Fixed-rates up at fastest rate in 15 years

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Average mortgage rates have leapt by 0.5 percentage points in a month, with interest on home loans hitting highs not seen since the mid-2010s. 

Five year fixed-rate deals are now at an average of 3.89 per cent, a 0.52 percentage point increase compared to June and the highest interest since November 2014, according to Moneyfacts.  

It means that someone taking out a £300,000 mortgage today could be paying £84 more each month than someone who locked down their rate in June. 

Bigger bills: Someone taking out a £300,000 mortgage today would be paying an average of £84 per month more than they would have if they took the same deal in June

Bigger bills: Someone taking out a £300,000 mortgage today would be paying an average of £84 per month more than they would have if they took the same deal in June 

And homeowners coming to the end of fixed deals could be stung with higher monthly bills when they come to remortgage, especially if they have not built up enough equity in their home to go up a loan-to-value bracket and secure a cheaper rate.

In 2017, average five-year fixed rates were just 2.85 per cent, 1.04 percentage points lower than today. 

The average monthly payment on a £300,000, five-year fixed mortgage on a 25-year term in 2017 would have been £1,399, but someone taking out the same mortgage today would pay £166 more each month at £1,565.

The total interest they would pay over the fixed term would rise almost £10,000, from £83,960 five years ago to £93,921 now. 

Meanwhile, the average two-year fixed rate mortgage also rose to its highest level since 2013 this month. 

The typical rate is now 3.74 per cent, a 0.49 percentage point increase compared to June, according to Moneyfacts.

Rise: Rates have climbed to record highs leading to worries over remortgaging costs

Rise: Rates have climbed to record highs leading to worries over remortgaging costs

This time in 2021, the average two year fix was at 2.55 per cent and the average five year at 2.78 per cent, 1.19 and 1.11 percentage points lower than today’s rates respectively. 

Chris Skyes, technical director at mortgage company Private Finance said: ‘Coming out of a deal now, clients will more often than not be getting a higher interest rate then they have been used to paying for years.

‘The only situations I’ve seen recently where I’m getting a client a better rate is where they were at 95 per cent loan-to-value originally and are now at a much lower loan to value so are benefiting from that, or where they’d had very specialist circumstances before, such as adverse credit, or very complex income, so had to go with a specialist lender and now can go to a mainstream one.

While he suggests other routes to making savings on your mortgage, including extending the term of the deal or putting an amount on interest only, he warns these may cost more in the long run.

‘My honest financial recommendation is to stick with the payments if you can,’ Sykes said. 

Standard variable rates have also risen, according to Moneyfacts, breaching 5 per cent for the first time in 13 years.

Having risen by 0.15 per cent this month, the average SVR now sits at 5.06 per cent an 0.66 percentage point increase since December 2021 when it was at 4.4 per cent.

How to remortgage

Buying a home is the biggest purchase most people make. Most require a mortgage to do it and breathe a sigh of relief once that’s sorted.

But time flies and with Britain’s favourite mortgages being two and five-year fixed rates, many homeowners find their deal is ending and it’s time to remortgage sooner than they think.

At that point it is time to plunge back into a mortgage world that many of us know little about – and with interest rates rising it’s important to make sure you get remortgaging right and move to the best possible new fixed rate or other deal.

The Bank of England has raised its base rate from 0.1 per cent to 1.25 per cent in the space of six months and figures from L&C recently revealed that the best two-year fixed rate mortgage has more than trebled.

Our guide explains what you need to know about remortgaging, including whether to move bank or building societies, why using a broker makes sense, how to get your home revalued, why you might be in a better loan-to-value bracket, and thinking about how long to fix your mortgage for this time round.

Increases ‘won’t cause widespread financial distress’ 

Despite these increases, and the ongoing cost of living crisis, Andrew Wishart, senior property economist at Capital Economics, says we are unlikely to see remortgaging pushing a substantial number of homeowners into financial distress.

This view is supported by the Bank of England. In its July Financial Stability Report it said that even after adjusting for rising living costs and interest rates, the share of households with very high debt servicing costs would remain well below financial crisis levels.

According Wishart’s figures the worst affected will be those coming to the end of a two-year fix in September 2023. 

Based on a 25 per cent deposit mortgage secured against the average home, he predicted the monthly repayments will increase from £719 to £882.

Plan ahead: Experts suggest borrowers start looking at deals up to six months before the need to remortgage to try and lock in a more favourable rate

Plan ahead: Experts suggest borrowers start looking at deals up to six months before the need to remortgage to try and lock in a more favourable rate

Why are rates going up and what should you do? 

Fixed mortgage rates often rise and fall in a similar pattern to the Bank of England’s base rate, which has been gradually increased since December in a bid to curtail inflation, but they are impacted by other factors too. 

Eleanor Williams, finance expert at Moneyfacts, said: ‘There are numerous factors which affect fixed rate pricing, rather than it simply tracking the Bank of England base rate. 

‘Providers take into account many influences, such as funding, swap rates, pricing pressures from other providers, and being able to maintain their service levels, among others. 

‘Having said that, it is interesting to note that in the period between December 2021 and July 2022, base rate has risen from 0.10 per cent to 1.25 per cent – an increase of 1.15 per cent in total.’

Last month the Bank of England rose the base rate to 1.25 per cent, the fifth hike in six months. 

At the time the cheapest two and five-year fixed rate mortgage deals were charging in excess of 2.5 per cent.

‘It’s more important than ever for borrowers to keep their mortgage under review, especially as other household costs are also climbing,’ advised David Hollingworth of broker L&C. 

‘Those that are currently in a fixed rate will at least be protected from the rate rises currently feeding through but they should look ahead to when the current deal will come to an end. 

‘Rates can be secured up to six months ahead, so in the current market it could be beneficial for borrowers to start their review sooner, enabling them to get ahead of any further rate rises.

‘They should be sure to factor in any fees rather than only zoning on the headline rate. Most lenders offer a range of options that can help with costs and fees which for some will be more cost effective, despite a slightly higher rate.

‘Those that have managed to lock into one of the ultra-low rates of last year may want to consider if they can make the most of that deal by overpaying a little. 

‘Most deals will allow up to 10 per cent overpayment per annum without incurring any early repayment charge and, whilst easier said than done, it could give the chance to reduce the mortgage whilst the rate remains lower, which will help them prepare for a potentially higher rate environment.’

Best mortgage rates and how to find them

Mortgage rates have risen substantially as the Bank of England’s base rate has climbed rapidly.

If you are looking to buy your first home, move or remortgage, it’s important to get good independent mortgage advice from a broker who can help you find the best deal. 

To help our readers find the best mortgage, This is Money has partnered with independent fee-free broker L&C.

Our mortgage calculator powered by L&C can let you filter deals to see which ones suit your home’s value and level of deposit.

You can also compare different mortgage fixed rate lengths, from two-year fixes, to five-year fixes and ten-year fixes, with monthly and total costs shown.

Use the tool at the link below to compare the best deals, factoring in both fees and rates. You can also start an application online in your own time and save it as you go along.

> Compare the best mortgage deals available now

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

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W.RE secures Parsons Green office development (GB)

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W.RE, acting in partnership with Taurus Investment Holdings, has acquired 22,240ft² Alexander House at 14-16 Peterborough Road, Parsons Green. The complex was purchased from Martins Properties with Puma Property Finance (PPF) providing €36m (£30m) funding. The new building will have a strong focus on sustainability, with a specific independent energy strategy that is expected to reduce carbon emissions by nearly 50% from the baseline scheme. The site will be delivered in line with W.RE’s approach to delivering sustainability through design, delivering buildings that are built to last and are equipped for future demands, whilst targeting BREEAM “Excellent” and an EPC of A, and will be developed with a net-zero carbon construction target.

 

The scheme will offer approximately 45,000ft² NIA of floor space, an abundance of natural light, air source heat pumps, PV panels, and two roof terraces on the third and fourth floors. The current property includes a partially let class E office building, garages facing onto Peterborough Mews, and a small residential mews house at 17 Peterborough Mews, comprising a freehold site of 0.33 acres. Planning permission for the scheme was granted in September 2021 for the redevelopment of a five-storey plus basement Class E-commercial building. The partnership intends to commence construction in early 2023 with completion scheduled for early 2025.

 

Andrew Haines, COO of W.RE said: “We are delighted to have completed the purchase of Alexander House. The existing property is in a fantastic location just off the green in Parsons Green. This area of South West London is popular with professionals and families due to good transport links, but it is lacking high-quality office space. We will deliver a sustainable, best-in-class building that will take advantage of the increasing requirement from tenants for workspace in attractive locations outside of historic core central London. It was a pleasure to work with both Taurus and Puma in closing this deal during a challenging time in the market.”

 

Nick Jacobs, Executive Managing Director, Taurus UK, commented: “As the return to the office continues, there is significant demand for Grade-A office space, especially in Fulham and South West London, where there is great quality of life. Parsons Green is within walking distance to local transit and local amenities, and will be outfitted with the latest sustainable building technology that ensure resilience through peak energy demand and meets the rigorous and aggressive climate targets for a safe and healthy future. We believe that such investment is essential for the medium & long-term preservation of value. We also believe that it is our duty to invest with ESG factors as a key part of our strategies.”

 

Kevin Davidson, Managing Director, Puma Property Finance, commented: “We’re delighted to support this development and to be working alongside a leading office and commercial developer in W.RE, who have a deep understanding of the London office market. With growing evidence of a flight to quality in the office market, we see real potential in well-located speculative office developments that are being built with sustainability at their core, especially given that 80% of London office space will need to upgrade to meet EPC requirements by 2030. It is crucial to the health of our future society that we support the development of sustainable infrastructure now, and this should be an exciting project with those principles at its heart.”

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Race against time to rescue ‘girl trapped inside’ house reduced to rubble in massive gas explosion

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Emergency services are searching for a four-year-old girl believed to be trapped after a terraced house collapsed following a huge gas explosion and fire in south London this morning.

Neighbours said it sounded ‘like a bomb had gone off’ on Galpin’s Road in Thornton Heath, near Croydon, just after 7am this morning, as 40 firefighters and six fire engines quickly rushed to the scene.

Three people have been hospitalised with potentially life-threatening injuries and the fire brigade confirmed their urban search and rescue crews are searching for one more missing person.

Merton Council has declared a major incident and confirmed it was a gas explosion.

Utility repair and maintenance works were being carried out on the road by Southern Gas Networks, who have been contacted by Mail Online for a comment.

Two neighbours, Kutoya Kukanda, 50, and Delroy Simms, 62, who have been called have been called ‘heroes’ for rescuing three children from the rubble at around 7am, said they feared a young girl was still trapped inside.

Mr Simms, dressed in his pyjamas by the cordon, said the explosion was like an earthquake and knew what it was because ‘that gas was smelling all week, really strong’.

He said that Mr Kukanda passed children out to him as bricks were still falling from the structure.

Videos and pictures shows the house completely reduced to rubble, planks of wood strewn about, and neighbours standing shocked outside in their dressing gowns.

Surrounding properties and vehicles are seriously damaged with tiles and bricks from the destroyed housing laying on top of them.

Around 40 properties have been evacuated as a precaution and a 50-metre cordon is in place. 

One man was treated for burn injuries at the scene and witnesses said other people including a child were stretchered away, Thornton Heath Chronicle reported.

A young girl was also seen stood outside with a blanket being treated for burns, as three people are currently in hospital with potentially life-threatening injuries.

London Fire Brigade (LFB) said four people have been rescued and are asking people to avoid the area.

The fire brigade are searching for one missing person after a house collapsed following a huge explosion this morning in Croydon, south London

The fire brigade are searching for one missing person after a house collapsed following a huge explosion this morning in Croydon, south London

The blast tore a huge hole in the wall of a neighbouring home, causing serious damage to what appears to be a child's bedroom

The blast tore a huge hole in the wall of a neighbouring home, causing serious damage to what appears to be a child’s bedroom

Following a fire and explosion, approximately 40 firefighters rushed to the scene of a house collapse in Thornton Heath

Following a fire and explosion, approximately 40 firefighters rushed to the scene of a house collapse in Thornton Heath

Residents thought a 'bomb had gone off' when the blast happened around 7am this morning

Residents thought a ‘bomb had gone off’ when the blast happened around 7am this morning

Neighbours on the road believe a girl aged around four or five is still trapped inside (pictured: Urban Search and Rescue team at the scene in Galpin's Road)

Neighbours on the road believe a girl aged around four or five is still trapped inside (pictured: Urban Search and Rescue team at the scene in Galpin’s Road)

Deputy Assistant Commissioner of London Fire Brigade confirmed one person was missing and being searched for

Deputy Assistant Commissioner of London Fire Brigade confirmed one person was missing and being searched for

Emergency services remain at the scene of the completely destroyed house in Croydon, so far London Fire Brigade say four people have been rescued

Emergency services remain at the scene of the completely destroyed house in Croydon, so far London Fire Brigade say four people have been rescued

The house was destroyed in the huge explosion which is believed to have been caused by a gas leak

The house was destroyed in the huge explosion which is believed to have been caused by a gas leak

The house explosion took place in Thornton Heath, Croydon around 7am this morning

The house explosion took place in Thornton Heath, Croydon around 7am this morning

Emergency services at the scene in Galpin's Road in Thornton Heath, south London, with the collapsed house in the background

Emergency services at the scene in Galpin’s Road in Thornton Heath, south London, with the collapsed house in the background

On the road where properties sell for around £430,000, the explosion launched a mass of rubble which seriously damaged houses either side of the blast and across the road.

Neighbours said they had reported a strong gas smell two weeks ago and others said they had been feeling dizzy and sick over the last two days.

One person said they were still able to smell gas after the blast which shattered windows and severely damaged neighbouring properties as other houses in the area were also evacuated.

Residents on the street told The Sun gasworks had been taking place for ‘four weeks’ there is no suggestion the works have any link to the blast at this stage.

A mother was crying in the street for her son as his bedroom was opposite the completely destroyed house, said one local.

The 25-year-old woman told MyLondon: ‘His mum was out on the street crying ‘My boy, my boy’.

‘They took him to hospital and we’ve heard since that he’s ok.’

She added that a ‘little girl’ and her dad escaped the destroyed house, and that the mum was rescued afterwards.

One resident, who lives on nearby Carisbrooke Road, said: ‘I heard the explosion at 7am, it was just the biggest bang you’ll ever hear.

‘So I went down the road to see what happened this morning and the whole house is gone, people living nearby said all their windows shook.

‘There was police, fire engines, a helicopter going around overhead. There’s not actually a fire from what I saw but you can still really smell gas, even two roads away where I am. They’re evacuating people from the houses nearby as they’re worried about another explosion.

‘There was a little girl of about 10 or 11 stood outside with a blanket bless her, god knows how she got out of that but she’s being treated for burns.

‘They were saying her older brother was still inside but he later got taken out OK I think.’

Dominic Francis, 41, and his partner heard a loud bang this morning, he said: ‘It is the third or fourth house explosion in the UK recently.

‘Something is wrong, I am worried it will happen to us.’

One Facebook user said: ‘I heard it whilst getting ready for work and thought it sounded like an explosion but was hoping I was wrong and that it was at a building site or something.’

Another added: ‘That was one loud bang thought a bomb had gone off’.

The house, pictured several years before the blast, was completely destroyed with neighbouring properties also badly damaged sparking the evacuation of 40 people

The house, pictured several years before the blast, was completely destroyed with neighbouring properties also badly damaged sparking the evacuation of 40 people

London Fire Brigade say four people have been rescued from the scene (pictured)

London Fire Brigade say four people have been rescued from the scene (pictured)

Around forty firefighters attended the scene and the surrounding area was evacuated after the explosion

Around forty firefighters attended the scene and the surrounding area was evacuated after the explosion

Nearby properties on Galpin's Road (pictured) have been damaged and four people have been rescued

Nearby properties on Galpin’s Road (pictured) have been damaged and four people have been rescued 

Police have evacuated and cordoned off the surrounding area following the explosion

Police have evacuated and cordoned off the surrounding area following the explosion

At this time, the cause of the fire and explosion is unknown, but a nearby resident said they could smell gas

At this time, the cause of the fire and explosion is unknown, but a nearby resident said they could smell gas

A London Ambulance Service spokesperson said: ‘We have treated four patients at an incident in Galpins Road, Thornton heath. One was discharged on scene and three others were taken to hospital.

‘We remain on scene with our emergency service colleagues.’ 

Merton council said in a statement: ‘We are working with London Fire Brigade and the Metropolitan Police following a major incident at Galpins Road in Pollards Hill.

‘Emergency services are on site following a gas explosion at a residential property, at least one property has been destroyed. We are urging people to avoid the area.

‘Firefighters are currently carrying out systematic searches and working to make the scene safe.

‘An evacuation centre has been established at the New Horizons Centre.’

A London Fire Brigade spokesperson said in a statement: ‘Six fire engines and around 40 firefighters have been called to a fire and explosion on Galpin’s Road in Thornton Heath.

‘A terraced house has collapsed following an explosion.

‘The Brigade’s 999 Control Officers have taken 13 calls to the incident.

‘The Brigade was called at 0708. Fire crews from Norbury, Mitcham, West Norwood, Woodside and surrounding fire stations attended the scene.

‘The cause of the fire and explosion is not known at this time.’

The Metropolitan Police confirmed officers are at the scene. A statement on Twitter said: ‘Officers are at the scene in Galpin’s Road as part of the emergency services response to this incident. Please follow @LondonFire for updates.’

London Ambulance Service said it is also responding to the incident.

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Home REIT acquires €101m UK resi portfolio

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Home REIT plc has acquired 199 additional properties located across England for an aggregate purchase price of €101m (£85.1m). The properties have added a further 869 beds for those in need to the portfolio, bringing the portfolio total to 10,421 and further enhancing the company’s geographic diversification. The acquisitions adhered to the company’s strict investment criteria, providing much-needed accommodation for vulnerable homeless people across England. They are let on an average lease length of 25 years at low and sustainable rents, on new, unbroken, long-term, full repairing and insuring leases to specialist registered homeless charities and community interest companies (CICs), providing them with the sought-after long-term security of tenure. The leases are subject to annual upward-only rent reviews, index-linked to the Consumer Prices Index, with an annual collar and cap of 1% and 4% respectively. Each of the properties is immediately income producing and, following these transactions, the blended net initial yield of the company’s portfolio is ahead of expectations.

 

Charlotte Fletcher, Partner at Alvarium Home REIT Advisors Limited, said: “This latest tranche of acquisitions represents a significant expansion of our portfolio and allows us to scale up our support for homeless people across the UK. The expeditious deployment of the proceeds of our significantly oversubscribed Subsequent Placing in May demonstrates the Company’s impressive capacity to source attractive investment opportunities and the strength of our relationships with local stakeholders. We are excited to welcome Alex to the management team and are confident that his appointment will further bolster our ability to deliver strong returns to investors whilst also fulfilling a pressing social need.”

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