How might the latest interest rate rise affect me?
What has happened?
After years of speculation about interest rates, the Bank of England have announced that interest rates are rising from 0.5% to 0.75%. The Bank of England base rate controls inflation by dictating how much banks give to those who are saving and charge those who are borrowing money.
This affects anyone in possession of or thinking of obtaining a mortgage. News of an interest rate rise can be unsettling, so we have put together this guide to help you understand how this change might affect you.
How might this affect me if I’m buying?
Even though the Bank of England interest rates have risen, that does not mean that all mortgage lenders will increase their rates straight away although it is likely to happen. If you have a fixed rate, any increases will not affect you until the end of your existing deal. However, if you have a variable mortgage rate, are a first-time buyer, or are looking to move, this increase in interest rates may have an impact on your monthly payments and affordability.
Therefore it is definitely worthwhile researching the market to make sure you get the best mortgage to suit you. Our sister company Mortgage Matters Direct have access to the whole mortgage market and may be able to provide you with a very competitive deal. On the positive side, the higher interest rate should eventually impact your savings which is great news for anyone saving a deposit for a property.
How might this affect me if I’m selling?
Interest rate increases can unsettle the housing market as higher mortgage payments can deter home buyers. It is therefore important to choose an estate agent that will work in your best interests and continue to try and obtain the best price for your property. At Ward & Partners, we remain dedicated to doing so and as always, we will use our extensive knowledge and experience to ensure that your property is at the forefront of a prospective buyer’s search.
A rise in the cost of mortgage payments may also force some existing home-buyers to sell their property and this can lead to a more competitive market. It’s more important than ever to be listed with the right estate agent who is going to actively promote your property.
How might this affect me if I have an existing mortgage
- Variable rate mortgage
As UK interest rates have been low for several years now, many people have opted for fixed rate mortgages. However, if you are on a variable rate the increase in interest will impact the amount you will need to pay for your mortgage. For example someone with a 25 year repayment mortgage of £100,000 can expect their payments to increase by £13.11 between 3% & 3.25% or £13.91 between 4% & 4.25% If you are concerned about this lack of certainty, now might be the right time to consider fixing your mortgage for a number of years to guard against any further increases.
- Fixed rate mortgages
If you are currently on a fixed rate mortgage, this interest rate increase won’t affect you immediately. However, when you reach the end of your fixed term, you could face a higher interest rate than you had previously paid.
How might this affect me if I’m a landlord?
The potential for mortgage increases can have an effect on landlords, especially if you have more than one property. It is therefore beneficial to choose managing agents who are consistent with their charges. At Ward & Partners, we are freezing our fees until 2020 and through Lets Switch we make it easy to switch managing agent and will even give you up to £250 towards your existing agents' release fees. Whilst we can’t control the UK’s base rate, we can ensure that you won’t have to worry about higher managing fees for a while.
Get in touch if you want to hear more about Lets Switch and how you can fix your fees
If you have any concerns about how this rise will affect you and your property, please don’t hesitate to contact us.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Mortgage Matters Direct is a trading name of Arun Estate Agencies Ltd. Registered Office: St Leonard's House, North Street, Horsham, West Sussex RH12 1RJ. Registered in England No.2597969. VAT No: 450-9134-61. Appointed Representative of Home In One Financial Services Ltd., which is authorised and regulated by the Financial Conduct Authority. England.