On 5th May 2022 the Bank of England raised interest rates from 0.75% to 1%. This is the fourth time rates have increased since December 2021. Interest rates are now at their highest level in thirteen years.
Take mortgage advice if you are due to remortgage?
Although most people are on fixed rate mortgage deal many mortgage deals are only fixed for between two and five years, so these maybe coming up for renewal in 2022 or 2023. If your mortgage deal is due to mature soon call our mortgage broking team as soon as possible for mortgage advice. Remember many mortgage deals can be arranged now and last for up to six months so agree it in advance of your mortgage ending. We can review the mortgage market to find you the best remortgage terms, liaise with your mortgage lender and complete all the mortgage paperwork on your behalf.
Will interest rates rise again?
It is difficult to predict how many more interest rate rises there could be in 2022. The Bank of England suggested that due to the difficult economic outlook with rising energy prices causing inflationary pressures more interest rate rises are likely. The Bank forecast inflation could rise above 10% this year, the highest inflation level since 1982, which has been worsened by the Russia/Ukraine war and supply chain issues following the Covid lockdown in China.
The Bank of England said: ‘We expect inflation to fall back next year and be close to our target in around two years. We may need to increase interest rates further in the coming months. But that all depends on what happens in the economy. In particular, we will be watching closely what is likely to happen to the rate of inflation in the next year or two.’
Should you act now if you are on a variable rate mortgage?
If you are on a variable rate mortgage your mortgage costs will increase now as mortgage lenders raise their standard variable mortgage rate following the interest rate rise. If you have a variable rate mortgage you could fix it now, then you will have certainty about the cost of your monthly mortgage payments. Contact our mortgage broking team on 01727 845500 for advice on mortgage products and insurance.
Amy Kadir, mortgage broker in St Albans, Hertfordshire said: ‘The cost of living is increasing, as fuel, food and electricity and gas prices rise for all of us. We are now seeing the effects of this when our customers call to remortgage. Many customers are now having to accept more expensive mortgage deals because of rising interest rates. However, because of the rise in other living costs they often can’t afford to increase their monthly payment, so the only option we have is to increase their mortgage term. This isn’t ideal as they will repay their original capital sum back more slowly while paying their mortgage lender’s interest costs for more years than they originally intended, but it’s the only option many customers have right now. That is why it’s important that everyone reviews their mortgage deal. It is important you know what type of mortgage you have, when it matures, what rate you are paying. For many people it is their largest monthly expense, so contact our mortgage brokers in St Albans, Lichfield or Chippenham or complete our booking consultation form to check you are on the cheapest mortgage deal. We offer an initial booking consultation so we can discuss your situation to check we can help you.’
Review your mortgage deal now to check you are on the cheapest option possible. Call our mortgage broking team on 01727 845500 or complete our booking consultation form.
As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.