FastMove – Should I Fix My Interest Rate
Experts are currently predicting that the Bank Of England will raise the base rate to 0.75% in May 2018. This opinion has come after the latest policy meeting. In fact it is said there could be two further increases by the end of 2018 which could have a significant impact on people who don’t have a fixed rate mortgage. This raises the question, should I start thinking about fixing my mortgage?
As we have previously stated the strong opinion is there is going to be a hike in interest rates but by how much is anyone’s guess. However, the majority of the lenders have already reacted to these rumours and removed some of the hugely attractive rates that were available a few months ago. However, don’t worry It’s not too late, there are still plenty of opportunities out there for you but as these rumours grow stronger lenders will react even more. If you are wondering should I fix my mortgage now, it’s simple speak to a mortgage broker as they are the experts in this area and also qualified to give financial advice.
What has happened to rates over the last few years?
The current governor of The Bank Of England have changed their minds a number of times as to when rates are to be increased.
It was first muted in 2015 that rates were set to go up. However, we all know this did not materialise. The main reason for this was inflation turned into a negative state. For an economy to maintain a healthy state the objective is for inflation to run at 2%. If interest rates rise historical data illustrates that inflation drops. This is why in this instance interest rates were not reduced.
When we moved into 2016 the rumours were the present state of the economy was not strong enough to withstand a rate increase. Predictions for a rate rise were moved to 2020.
However we all know what happened then, Brexit came which was basically a game changer overnight to all forecasts and predictions. All of a sudden there was talk of an economic slump and because of this fear The Bank Of England actually did the opposite of the original forecast and they reduced rates from 0.5% to 0.25%. Further cuts were also expected but nothing came of this.
However what has surprised everyone is how tenacious the economy has been since the results of the EU referendum were announced.
In October inflation rose to 3% which again triggered rumours of an imminent rate increase. This did finally materialise and in November 2017 rates were increased to 0.5%
Re-Mortgaging has become more difficult recently
The rules for re-mortgaging have recently changed making things more difficult for borrowers. Affordability tests when applying for a mortgage were tightened slightly by the lenders. Previously if all you were doing is re-mortgaging it wasn’t imperative lenders applied tight affordability tests even though some lenders still ran the tests some didn’t as it made administration for them a lot easier and quicker. However bypassing these tests is no longer an option which potentially exposes people to be left on their existing deal.
What are the best ways to find out your mortgage options?
I am hugely confident that a large percentage of consumers will not be aware of these new rules and the impact it may have on them. For example there monthly payments could go up as and when the lender wants. This is not a nice place to be for anyone.
Don’t just think comparison websites have the answers. There will be mortgage brokers out there with access to products you will not see on these comparison platforms. Furthermore the product you see on these sites is not guaranteed to be open to you.
This is why I strongly suggest using a mortgage broker/advisor to help you. Granted some of them charge for their time but the chances are in the long run it will save you money due to the strength of the interest rate they will be able to offer you. Nearly 70% of lenders now use mortgage advisors and this is going up day by day.