Mortgages and interest rates
Inflation, interest rates, house prices and mortgages have been highly popular news stories for a number of years now.
The general opinion is that interest rates will rise and with a historic low rate of 0.5%, that view is most probably correct. However, when will that be? How high will they go? Will it be a slow steady rise? Or will they rise quickly? Has the recently published inflation figure of 4% meant that rates will rise sooner rather than later?
The next decision made by the Bank of England Monetary Policy Committee will be announced at 12pm on Thursday 10th March. We will all be watching this closely.
Every Lender has their own Standard Variable Mortgage Rate (SVR). This varies massively between Lenders, ranging from 2.5% and even up to 5.95%. A lot of borrowers have been staying on the SVR and waiting to see what happens next. The majority of mortgage schemes available are dependent on the difference between the amount owed and the current value of your property. The lower the loan to value, the safer the Lender feels and therefore the better the deal offered.
However, due to the value of property falling, loan to values have been increasing. Therefore, by waiting to see what happens to interest rates, some borrowers have now seen their loan to value rise and have lost out on some potentially good deals. In November there was a 2 year fixed rate available with an interest rate of 2.75% with no set up costs, but a maximum loan to value of 50%. Now, they tend to be around 3.5% with fees of approximately £999.
I would strongly recommend a review to see how your current mortgage product compares to the rest of the market. Even if you are tied to your current Lender, it is good to plan ahead so you know what your future payments will potentially be.
Please feel free to email or call me to discuss your current mortgage.