According to the latest research, borrowers will be able to deal with a larger than expected increase in interest rates.
Speculation among industry experts is that the base rate may soon be raised by the Bank of England, which is currently at the record low rate of 0.25%. Some believe that an increase in interest rates will take place as early as August this year. UK Finance, which incorporates the Council of Mortgage Lenders, has conducted research which indicates that most borrowers would be able to cope with an increase in interest rates.
There are around 4.2m borrowers on fixed rate deals, around half of which will approach the end of their deals at the end of this year or early 2018. They may be able to re-finance their mortgage with a new fixed rate product, possibly with the assistance of a CeMAP qualified mortgage advisor. Around 3.9m borrowers are on the lender’s Standard Variable Rate, and 1.4m on tracker mortgages.
Since the Mortgage https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpget Review, which launched in 2014, tough affordability tests are carried out to ensure that borrowers can cope with increases in interest rates. Since 2015, around 92% of mortgage applicants have had stress tests applied to see if they could afford interest rates 3% above the current level.
However, the director at London Money, Martin Stewart, says that very few people have money to spare at the end of the month, with many borrowing the maximum available. Mortgage advisors may be able to help borrowers re-mortgage to lower rate deals, to increase their disposable income.
