What the increase in interest rates will mean for your property.
At the beginning of November, the Bank of England raised interest rates for the first time in over a decade, leaving many homeowners across the UK confused and a little worried. This new interest rate of 0.5% means that the existing rate has doubled and has created a lot of worry when it comes to mortgages. So, the experts at Poppy Residential are here to provide you with some guidance and advice if you're worrying about your mortgage repayments.
First of all, mortgage rates are still at an all-time low. Before this change the interest rate set by the Bank of England was a historically low 0.25% whereas in 2009 interest rates reached a staggering 4.5%.
Fixed Term Mortgages
Around 70% of people that have taken out mortgages have done so on a fixed rate basis. Anyone on a fixed rate mortgage rate will not be instantly affected by the base rate rise in interest; you will have to wait until you reach the end of your term. However, if your fixed term is soon to run out, acting quickly will ensure that you secure a better rate. As rates are likely to continue to rise, now is a great time to lock in a low, fixed rate.
There are 3.9 million people with variable mortgage rates within the UK. Some may be paying more than those on fixed rate deals whilst others may be on very low mortgage rates after years of payments. However, if a rate rise is passed on by a lender they could see an impact on their repayments.
What will it mean for Property Prices?
Right now, property prices will not be rising significantly so there is no need to panic. Whilst increases on monthly payments may increase by around £22.00 a month, based on a typical variable rate mortgage of £175,000, the actual price of the house will not. However, this doesn't mean that house prices will decrease either.
For many landlords, now is the time to evaluate current options. When it comes to profits, you will need to assess whether now is the time to increase rent, to re-mortgage the property or whether you need to have a chat with a mortgage expert. However, landlords this is not all bad news, with the interest rate on the rise it is expected that there will be rise in residential lettings rather than purchasing.
We understand that for many property owners, prospective buyers and landlords this increasing interest rate is quite overwhelming which is why our property experts are on hand to answer any queries. From stamp duty to rent payments, we are available to advise you on all things property to save you from worrying, so give us a call on (01482) 324010.