Change in Interest Rates
What Does the latest Interest Rate Rise Mean For Your Mortgage?
Most peoples’ mortgage deals are either fixed-rate or
variable. A fixed rate deal is for a set period, whereas with a variable rate
deal, the interest rate can move at the discretion of their lender.
If you have been on the same mortgage deal for quite a few years now, you’re most likely on a variable rate deal. This means that unfortunately, your rate will increase with today’s base rate rise.
Robert Nichols, CEO of Portico says:
“Those on variable rate mortgages will see a small increase in their monthly mortgage payments. For example, for the average mortgage in Britain of £175,000, an increase of 0.25% would increase monthly payments by about £22 a month.”
But it’s not all bad news, approximately 70% of people who take out a residential mortgage have done so on a fixed rate basis. These customers will not be instantly affected by the base rate rise from the historical low of 0.25%. But if you’re on a fixed rate mortgage, that doesn’t mean you can just sit back and relax. If your fixed term is soon to run out and you will be looking to get a new fixed-rate deal, the quicker you act the better rate you will secure. Rates are going to continue to rise over the next five years - so I’d advise locking in a low, fixed rate now.
Deals Are Still Close to the Lowest-Ever Levels
If you’re hoping to get on the property ladder, it will come as welcome news that there are still some fantastic products on the market. Please contact Bristol, Bath or Exeter Mortgages Online for a FREE Consultation to discuss your First Time Buyer, Remortgage or Buy to Let mortgage requirements.
Can Landlords Mitigate the Interest Rate Hike?
Landlords are already seeing their profits decrease as a result of recent tax changes and changing legislation, and today’s interest rate increase will simply add on more costs.
Mark Lawrinson, Regional Director at Portico says landlords can mitigate the hit by cutting their interest costs:
“Buy-to-let mortgage interest rates have dropped dramatically in recent years, so deals currently on the market will be a lot better than products arranged a few years ago. It’s sensible therefore to shop around and remortgage. That being said, landlords will now have to consider the new PRA rules.”
With large increases in property prices over the last five years, another tip is to get your rental property re-valued. This will make your lender recalculate your LTV, and a lower LTV means a better interest rate and a larger choice of lenders.
We will be delighted to discuss any of your mortgage or protection requirements with you.
For expert advice and more information or to book your FREE consultation please visit one of our websites, call or email.
Bristol Mortgages Online www.bristolmortgagesonline.com Tel 0117 325 1511
Bath Mortgages Online www.bathmortgagesonline.com Tel 01225 584 888
Exeter Mortgages Online www.exetermortgagesonline.com Tel 01392 690 888
