More than 2.6 million* mortgage borrowers have never experienced an environment where the Bank Rate has risen!
The increase in the Bank of England’s Bank Rate from 0.25% to 0.5% is the first such rise since July 2007. Back then, the rate hit 5.75%, although, for much of the following decade the Bank Rate did sit at 0.5%.
(Source: Bank of England, November 2017)
So it’s not panic stations, and the Bank of England regularly says that any rise would be measured and increase slowly over time. However, it does signal intent and will be a concern for some, such as the 4 million or so* on a variable rate with their lender, who may see a rise in their monthly payments.
The current climate
In recent months we’ve already seen some lenders upping their mortgage rates, partly in anticipation of the Rate rise, and partly because of an increase in SWAP rates (the interest charged between banks for lending to each other).
That said, the whole market hasn’t changed overnight, and if you consider your existing deal, should you be on a fixed rate, for example – and took it out a few years back – then you may be pleasantly surprised to see what’s on offer.
The importance of Advice
In short, the Bank Rate rise is simply yet another consideration amongst the ongoing issues of Brexit, rising inflation, value of the pound, house price moves and the overall economic conditions for the UK.
Of course, you may be perfectly happy with your current situation and the deal
that you’re on. Additionally, you may have one or more protection policies in place to ensure that you (and your family) are in a good position should the unexpected occur.
However, for others the Bank Rate rise may be a wake-up call, which prompts the need to have a conversation, such as:
1. You’re approaching the end of your mortgage deal period, and want to chat through the options, and perhaps consider one of the current deals on offer.
2. You might simply want to change your existing arrangement, possibly to raise further funds, or feel that it may be financially beneficial (even when factoring in any applicable early repayment charges).
3. A house move may be on the cards, and you might require a larger mortgage.
4. You may be one of the 3-4 million** sitting on your lender’s Standard Variable Rate, and could want to act, or perhaps feel (possibly wrongly) that you may not meet the current affordability criteria.
5. You’re a first-time buyer who has saved up a deposit, and is keen to jump onto the property ladder, and perhaps take advantage of the schemes on offer.
6. Or you’re a landlord – or prospective one – in which case it would be wise to talk to us, as so much is occurring in this sector.
As you can see there are plenty of areas where we may be able to help you – and that’s before we even cover the importance that protection products may play for you, your partner, and your family.
You may have to pay an early repayment charge to your existing lender if you remortgage.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Our broker fee is £395, payable should you ask us to arrange your mortgage, payable on application. This fee will be fully refunded if the mortgage application is declined and we are not able to source a suitable alternative lender.
(Sources: * UK Finance, Nov. ‘17; ** Which.co.uk, March ‘17)