INTEREST RATES RISE to 4%: What does it mean for MORTGAGE RATES? 📊
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If you’re looking to buy a home right now, or you’re coming to the end of a fixed-rate mortgage deal, you’ll know there has been lots of news about interest rate rises and how they can impact mortgage rates.
And now, the Bank of England (BofE) has announced another interest rate rise of 0.5%, which takes the Bank’s Base Rate to 4%
Summary of Rightmove's latest findings below:
🔸 This is the 10th rise by the Bank’s Monetary Policy Committee (MPC) since December 2021
🔸 Interest rates are now at the highest they’ve been since 2008
🔸 The ‘Base Rate’ is set by the BofE and is the interest rate it charges to other banks and financial institutions
🔸 Base Rates are adjusted to control inflation in line with Government target
🔸 Currently, target is 2% inflation but current level is much higher at 10.5%
READ MORE: Why does the Bank Rate change?
What is the UK interest rate forecast?
🔸 The BoE Base Rate is forecasted to increase in the first half of the year
🔸 It may rise to about 4.5% by the summer, when it’s expected to peak.
🔸 After that, it’s thought they should start to come down
Will mortgage rates go down?
🔸 YES!
🔸 Even with the Base Rate rising, mortgage rates are expected to keep going down
🔸 This is because we’re now back in a period of relative stability which means lenders are pricing in higher interest rates
Is now a good time to buy a home?
🔹 Yes!
🔹 The mortgage market is now looking more positive compared to the last three months of 2022
🔹 Most 5-year, and many 2-year fixed-rate deals are now being offered below 5%, compared to more than 6% at their peak in October last year
READ MORE: How much can I borrow with a mortgage?
Will my mortgage repayments increase now interest rates have gone up?
🔹 For the 15% of borrowers with a tracker mortgage... Yes, your payments will go up
🔹 If you have a fixed-rate deal, the good news is that your monthly repayments won’t change, at least until your current deal ends
I’m on a fixed rate, what are my options when my deal ends?
🔹 Ending within 6 months, look to lock in a new deal now
🔹 Many lenders will allow a product switch without early repayment charges if you stay with them
🔹 Locking in a 5-year deal could bring costs down and give you certainty until 2028
🔹 If you’re looking to move lenders, start well before your fixed-rate deal ends
🔹 The application process can take several months or more
🔹 Ask your lender what they can offer or speak to a mortgage broker to find out which deals are available to you
📩 For the full article from Rightmove, click here 📩
Please note: Cavendish Residential are not authorised to give financial advice; the information and opinions provided in these articles are not intended to be financial advice and should not be relied upon when making financial decisions. Please speak to our expert team and we'll put you in touch with a specialist mortgage provider and/or Financial Advisor.
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