It’s been a while since we talked about interest rates. So here we focus on the Bank of England base rate increases and the impact on lending and saving rates for consumers this coming year.
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.
The current financial and political landscape
According to UK finance experts, the future of interest rates is going to be hard to predict. In previous years, the economy remained relatively steady and the rate unchanged for nearly a decade. However, the rate has increased multiple times over the last few years and with the uncertainty of Brexit looming over us all, the future of the economy is an obviously precarious situation. The outcome of the deal that is agreed upon for the UK to leave the EU will undoubtedly affect the base rate, but experts remain torn over exactly what the effect will be.
The current Bank of England base rate stands at 0.75%. Some experts anticipate two 0.25% rate hikes in the remaining months of 2019, pushing the base rate to 1.25% by the end of this year.
The rate is already the highest it’s been in about ten years, and the slight yet constant increases will not sit well with consumers because the base rate affects everything – including both fixed and variable mortgage rates and savings account rates.
Will the base rate rise?
As you may well know, when the base rate changes, banks and building societies compensate for the rate change and will raise their rates right along with the Bank of England. While everyone dealing with loans or savings will feel the rate increase, those with tracker mortgages will be hit immediately. If you have a fixed rate mortgage, you’re safe for now but will inevitably come face to face with the reality of the change when it comes time to remortgage.
Good news to cling to is that other experts don’t necessarily agree about the steady increases over the next twelve months. Some argue that we won’t see another rate hike at all and others predict a more conservative interest rate of 1% reigning supreme at the end of 2019. But it’s really hard to tell exactly what is going to happen – Brexit might even have the pleasant side effect of reducing the base rate again. Only time will tell.
What can you do to prepare?
If you want to take advantage of the current base rate before any more increases happen this year, we urge you to speak to a mortgage adviser today.
At Dental and Medical Financial Services, we can ensure you and your finances are ready for the mortgage application process and help you find the provider that’s right for you and your needs before another rate hike changes the game again.
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