It shouldn’t come as a surprise that rock bottom mortgage rates won’t be staying that way for long. Experts have been warned about this for a while, but the fact was really hammered home this week.
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.
As the Bank of England (BoE) attempts to keep inflation around 2%, the likelihood of the base rate rising from 0.1% increases daily. The Office for Budget Responsibility (OBR) released new inflation predictions alongside the Budget Statement that suggested that with the increases to the Bank of England base rate, lenders will pass along the increased expense to borrowers and the cost of servicing a mortgage could increase by 5.6% next year and 13.1% the following year.
What this means for mortgages
Because the base rate has been so low in recent years, most borrowers have naturally drifted towards fixed-rate mortgages to take advantage of the security of a low rate and a fixed term. Others have opted for a variable or tracker rate mortgage because the rate is so low, and in that case, those people should prepare for monthly payments to go up once the rate changes. Many people hoping to buy a property soon have been watching the rate and fluctuating house prices, but with a potential rate hike on the horizon, it might be time to act now.
Some lenders have already begun to increase some of their lower-priced offers in anticipation of the BoE review. Since rates have been consistently dropping for so long, if you haven’t been keeping an eye on the market and wider economy, it might be a bit jarring. But, there is still time to lock in a rock-bottom mortgage rate before mass changes come into effect.
If you’re in the market for a new property, be sure to stay updated about the rates and subsequent lender activities that could mean a higher price tag for your next home. For help navigating the market, get in touch with us today.
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