Banks are starting to increase the rates on their mortgages, particularly the longer-term fixed rate deals. However, there seems little notion to increase savings interest as financial institutions opt to capitalise in this period of economic transition. Switch to a low-rate mortgage soon, before rates increase further. Plus, consider switching your savings off the high street, where rates may be more competitive.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
(1) Rates are rising – secure your low-rate mortgage soon
The latest analysis of the Bank of England figures by Your Money, reveal that rates are slowly starting to creep upwards. This is particularly noticeable for the longer-term fixed rates over say 10 years. However, some mortgage lenders are also starting to increase their two year and five year fixed deals too.
Acting soon could mean signifiant savings to your monthly mortgage over the next few years.
The increase to the cost of borrowing in the UK was forecast in early November 2016 following the US presidential election. Capital markets started to reflect higher borrowing costs between banks almost immediately after, which is now being passed down to the consumer.
Speak to a specialist mortgage adviser who can calculate potential savings from switching to a better rate, plus find low or no-fee mortgage options for you.
(2) Search for better savings rates
Whilst mortgage rates are increasing costs for borrowers, savers on the other hand are continuing to get a raw deal, generally.
The gap is widening more than ever before, according to figures by Bank of England, see graph below.
Banks are opting to capitalise themselves during this period of transition in the economy, where they rely on inertia from savers to look elsewhere for a better rate.
Don’t fall into this trap as there are other options available for savers and investors; it may just require looking further than the high street banks.
Generally, banks are now making more profit on their mortgage lending than before the financial crisis, due to the slash in the base rate. Yet, little of this is being used to encourage savers to invest by paying a reasonable return on their investment.
Some smaller banks though, that need to attract new business, are offering more competitive savings rates.
“High-street banks haven’t had to work for savers’ cash.” Instead, he said, they rely on their name and branch locations.” Tom Adams, Savings Champion site
Speak to a specialist financial adviser who can look at savings and investment options for you, based on your attitude to risk.
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