By the time you read this month’s newsletter the Bank of England’s Monetary Policy Committee may have already decided to keep the base rate at 0.25%, or apply a historic increase. Whatever the decision, it’s important to understand how a base rate could affect you and your finances.
Saving up for a deposit
Low rates have meant a challenge for savers to build up a deposit for a mortgage in recent years. A base rate rise could trigger a new focus and renewed competition between banks and building societies to offer the best rates on savings.
Ready to buy
This is a crucial time for those with a deposit in hand, ready to call up their adviser and start searching for that dream home. It is also an exciting time, as the thought of turning those rental payments into mortgage repayments is a big turning point for your finances.
Alternatively, you may also be at the point where a little bit more saving could put you in a more favourable position for a larger deposit, as this often means a better rate on your mortgage. But the costs of some fixed rate mortgages are starting to rise, so there may not be a better time to call us to make the big step.
One obvious effect of a rate rise is the impact on mortgage repayments. A rate increase may have those on Standard Variable Rates (SVR) looking to secure a better deal on their mortgage, in case the Bank of England raise the base rate once again or lenders decide to change their own SVR.
43% of homeowners are currently on a variable or tracker mortgage that would likely see their repayments rise after a base rate increase. It is important to check which type of mortgage you are currently on, to ensure you understand the effects of any rate rises.
If you want to discuss what a rate rise might mean for you and your finances, then contact us today to arrange a meeting with us!