At the start of November 2017 the Bank of England finally raised the base rate from 0.25% where it had sat for many years to 0.5%. Can any of us remember the last time that mortgage interest rates went up…..is was actually back in 2007…!!!
Interest rates have been low for a long time and many borrowers have never experienced a rate rise. If you have purchased your first home in the last 5 years then this is going to be a new experience for you and one that you may be concerned about.
The financial commentators that we read every day still maintain that interest rates are lower than they should be. And if the financial markets are to be believed we are going to see further rises in the coming months and years. Of course they can not accurately predict this but all the signs are there.
Who are the short term losers in this?
Many lenders will pass this increase immediately on to any of their borrowers that are currently sitting on their standard variable rate (SVR). The letters may well already be in the post notifying people and giving them their new monthly payment.
Looking to fix your mortgage now could negate this increase and potentially reduce your payments as many of the fixed interest rates on offer are already lower than the SVR’s out there. Added to that is the knowing what your payments will be for a fixed period of time, and you start to see the sense in checking.
If you have previously had the foresight to fixed your mortgage then you will already be enjoying knowing what your monthly payments are and your current payments will remain unchanged. But you will go on to your lenders SVR once this ends and in most instances this will increase your payments.
If your fixed rate is due to end soon then you may want to consider looking at a longer term fixed rate now. There are deals out there and you will protect yourself from any other short term rate increases that may be planned.
If your mortgage tracks the Bank of England base rate then by its design you should be seeing your payments increase as the 0.25% increase is applied.
As you receive notification you could also consider fixing your future payments. As a minimum you should be considering what the recent rise has done to your payments and what future increases, if we see them, will further do to your payments.
Those borrowers that see an increase in their monthly mortgage payments may start to see less money available to service other debt that they have. High credit card balances for instance still need to be paid off and that money has to come from somewhere.
If your plans were to refinance or restructure your debt then looking to do this now could be the best option. You could consider looking for a new deal that could get the balance on to a better interest rate, or you could consider consolidating it in with any new deals you can find for your mortgage.
Just Remortgages has for a while now been encouraging its clients to take a FREE review of their mortgage interest rates and subsequent monthly payments. We knew that by giving you your options before The Bank of England raised the base rate from where it has sat for many years, you would save money EVERY month and help lock in a new rate potentially over a longer period time.
But its not too late to do this. If any of the situations above are where you find yourself with your own mortgage then we want to speak with you.
To find out more, and to discuss your own situation and see exactly what sort of deal you could secure for yourself, please visit us at www.justremortgages.biz. Just leave your details and we will get back in touch with some more information.