![]() ![]() This makes it a lot more difficult to budget your money effectively each month, especially during the current climate with the general cost of living rising. What I do know is that a lot of people with mortgages fall into the trap of going on to a “Standard Variable Rate” with their lender, meaning your fixed rate has expired and you’re now usually on a higher variable rate, which can fluctuate month on month. Remember that the interest rate is only one factor of how much you will pay the level of borrowing and the term of your mortgage also has a direct impact on your monthly payments, so a tailored solution can sometimes mean the overall increase in rate isn’t as hard-hitting as you may think. ![]() There’s no way of knowing how it’s going to pan out over the next few months, even years, in terms of making decisions on whether to buy a property/remortgage with a longer term fixed rate more of a personal choice and needing tailored to your own plans for the short and medium term. So maybe a bit of perspective is required. Go back even longer into the 80s and 90s and the base rate was hitting peaks of up to 14 per cent. Having said that, we have perhaps become used to having it so low for so long, with the base rate figures around 2007/2008, during the time of the “credit crunch”, sitting around 4.5 to 5.75 per cent. This, of course, means that anyone looking for a new mortgage will almost certainly have to pay more than they would have previously if buying or remortgaging. Good news for savers, not so good news for borrowers. However, during 2022 and now midway through 2023, it has gone up multiple times, with it currently sitting at five per cent, meaning that mortgage rates that lenders offer are creeping up each month as well. Since 2007, we were in a period of time which saw unprecedented low interest rates and there were no significant changes to the base rate going into the last year or so, where it was sitting at 0.25 per cent. This effectively means that overall rates on mortgages will increase if it goes up and rates “should” go down if they reduce it. Unfortunately, we’re not privy to inside information on these big decisions and it’s left to the Bank of England’s Monetary Policy Committee to decide, on a monthly basis, if they’re going to change the Base Rate to reflect the current economic climate. I’m often asked what I think will happen with interest rates in the next year or two and I wish I could provide a definitive answer. Hello and welcome to this month’s advice column. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |