What does this mean to you & what does the future hold?
In simple terms, 0.25% increase on a £200 000 mortgage would mean you are paying an extra £500 per year. OK, not too scary but, the general consensus is that there will be another 0.25% rate rise in May, another £500 per year on that £200 000 mortgage. Now you are paying £1000 per year more for your mortgage. Starting to get a bit scarier.
It’s felt that these small but gradual increases will continue, with perhaps a pause when we hit a base rate of 2.5%. That’s a total of 2.25% increase or another £375 per month increase in your mortgage payments.
The thinking behind this is that not only does this return the financial industry some way back to the old “normal” but, it also gives Mark Carney some “wriggle room”. In other words, if we end up with a No Deal Brexit or a less than satisfactory outcome, the Bank of England can drop interest rates to help put a smile back on our faces. This can’t be achieved unless rates start to steadily increase between now & our EU departure.
So, what’s your option? Well, with two-year fixed rates starting at around the 1% mark & five-year fixed rates to be had for close to 2%, this really is the time to look at securing your mortgage payments.
Expecting a bumpy ride on our journey out of the EU, I would think a five-year fixed rate would be a sensible choice. When compared to a shorter fixed rate, you’ll avoid the costs on renewing your mortgage in two-years’ time plus, chances are that in two-year you will not be offered similar rates to rival what you can get a five-year deal for today.
Now really is the time to ensure you are financially secure &, fixing your mortgage payment is a great first move into taking charge. To find out what your mortgage options are & to ensure you are being offered the best deal to suit your future plans now really is the right time to speak with an independent mortgage adviser.
I realise that this is all crystal ball thinking but as the words of wisdom imply
“I don’t regret the things I’ve done, I regret the things I didn’t do when I had the chance.”
Today you have a chance to review your mortgage while rates are still low. Don’t put the review off until rates start to increase & you start to feel the pain in your pocket as that will definitely be the time when you regret the things you didn’t do when you had the chance.” Call me for a chat about it 01375 5311012 Speak soon, Ian.