It is no surprise that the Bank of England has increased interest rates, even if this is the first time that this happened in over a decade. The change sees the rate moving from 0.25% (which was a historic low for the level) to 0.50%. The Monetary Policy Committee voted on the change and it seems that seven members voted for the increase with two members voting to keep the rate as it was. Of course, while this move has been predicted for a while, and it isn’t a surprise, many mortgage holders may be in for a shock by the change to their monthly payments. Importantly though, it shouldn’t be too much of a negative issue in the market.
Fixed rate mortgage holders feel the benefit
This is one of the times when fixed rate mortgage holders benefit from their decision. The consistency that comes with a fixed rate mortgage is appealing for people who create budgets, who plan ahead or who have very little leeway with respect to mortgage rates, and when interest rates rise, these people are relatively better off.
If you are on a fixed rate mortgage, you can take this news in good comfort knowing that it doesn’t change your monthly mortgage payments. Don’t forget that lenders make commercial decisions and there is optimism that some will be prepared to absorb the interest rate and Nationwide has just cut its fixed rates in the past week. There are attractive mortgage offers to find, but it makes sense to speak to experts to ensure you receive the best guidance and support.
Even if you pay more, it shouldn’t change too much
When people hear that they have to pay more, they will naturally worry but with this change, the majority of mortgage holders will not be badly affected. According to Russell Quirk, the CEO and founder of eMoov.co.uk, the average mortgage holder will have to pay an additional £16 a month. This isn’t ideal but if you are prepared for this change, you should be able to deal with it by making a slight change to your spending habits.
Some people will say that this change has been a long time coming and it should serve as a reminder that people should regularly check their mortgage to ensure it is right for them. It may be that you can find a better mortgage for your needs and finances, so don’t just settle for what you currently have.
When it comes to understanding mortgage payments and ensuring you don’t suffer any shocks due to interest rates, it makes sense to speak with the experts. Feel free to speak to Spencer Harvey by calling us on 0161 480 8888 or send us an email at info@spencerharvey.co.uk. For a free valuation please visit:https://valuation.spencerharvey.co.uk