The Bank of England recently decided to leave the current base rate alone, which meant that millions of homeowners could relax, knowing that their mortgage repayments wouldn’t increase immediately. However, experts are warning that rises in interest rates are coming soon, and homeowners could be left with much higher payments.
The current Bank of England base rate of 0.25% is the lowest in its 323-year history, leaving many homeowners at risk of paying far higher payments in the coming years. According to Rachel Springall, of Moneyfacts, the financial data website, even just a small rise in interest rates could make a huge impact on consumer finance. The governor of the Bank of England, https://www.beaconfinancialtraining.co.uk/wp-content/uploads/2020/06/cemap-online-and-classroom-training-uk.jpg Carney, said that interest rates were likely to increase more than was expected by the markets.
The National Institute of Economic and Social Research (NIESR), revised its forecast of a rate rise in 2019, to bring it forward to the first quarter of 2018. The impact of a rise in interest rates on a household will depend largely on the amount of the mortgage, the terms, the length of the term and whether it is variable or fixed rate.
David Blake, from Which? Mortgage Advisors, says that if a borrower is on a fixed rate deal, any increases won’t have an effect until the deal comes to an end, whereas those on a variable rate will feel the impact immediately. CeMAP qualified mortgage advisors can help consumers to make the most suitable choice, to try and avoid financial hardship if rates increase.
