Now that the Bank of England has finally increased base rate back to its pre-referendum level of 0.5%, many UK borrowers are looking at their finances and considering how this might affect them.
The move has raised some big questions for borrowers, least of all the possibility of another rise in the near future. We can work through them with you when you next visit, but in the meantime, here is the latest…
Has this rise affected my mortgage?
Those financing mortgage repayments on standard variable rates (SVR) may have already seen their repayments increase, with those on tracker rates even more likely to have been affected. According to UK Finance figures, borrowers with the average outstanding balance of £89,000, would see their payments increase by about £12 a month.
This change will be new to some, as the Bank of England admitted that around two million households have never experienced a rise in base rate. Some experts suggest this could be the beginning of the end for the low-cost financing of mortgages that we have seen.
Will rates rise again?
The nine members of the Bank of England’s Monetary Policy Committee voted 7-2 in favour of an increase, justifying the increase by pointing to record-low unemployment, stronger global economic growth, and rising inflation.
The deputy Governor of the Bank of England warns the rate rise may not be a one off. He has suggested there may be two more rises to get inflation back on target, but this is something impossible to predict.
Is now a good time to remortgage?
The number of people remortgaging to a five-year fixed rate deal broke new records in September, as borrowers anticipated the possible rate rise. This was before a decision on rates was made, which shows people are keen to lock in to a low rate.
Now that this period of inertia looks to be over, the argument for longer-term fixes is as strong ever. Not every lender will immediately pass on the rise to their SVR customers, but many are currently reviewing their rates.
What’s the next step?
Talk to us! If you are concerned, have questions, or just want to consider the next step carefully before making any decisions, we can work with you and discuss your options.
Locking into a fixed term may not be the most suitable option for you, which is why we discuss all your choices in detail. Call us today to arrange a meeting. 01453 887179