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The Bank of England must decide next week how much higher it will raise borrowing costs as it tries to bear down on Britain’s double-digit inflation rate without adding too much stress to an economy already close to recession.
BoE Governor Andrew Bailey said last week that inflation might have turned a corner after it fell in November and December, but at above 10%, it is still more than five times the BoE’s 2% target.
Bailey has also warned that a shortage of workers could make it harder to bring down inflation by fuelling strong wage growth and creating too much heat in the economy.
INTEREST RATES SEEN CLOSE TO PEAK
The BoE was the world’s first major central bank to raise rates when it began pushing up borrowing costs in December 2021, and it is expected to announce its tenth hike in a row on Feb. 2. Investors are mostly betting on another half-percentage-point increase to 4%.
What about Mortgage rates Whatever deal you have, one thing is certain when it comes to interest rates. Rates have been rising in recent months and are likely to continue to do so. The Bank of England has raised interest rates nine times since December 2021, and the base rate presently sits at 3.5%. With high inflation proving problematic, investment markets predict the Bank of England will raise the base rate to around 4.6% by July 2023. That would mean the typical monthly repayment on a 25-year mortgage that isn’t fixed will rise by approximately £50 per month for every £100,000 borrowed.
It may be worth reminding ourselves that historically the norm for the base rate has been around the 5% mark.
Should you fix your mortgage rate?
With the Bank of England base rate at 3.5% and a further 0.5% predicted rise in February. The markets are predicting two-year fixed-rate mortgage rates to rise to around 5.4% by the middle of 2023.
If you are concerned about how high-interest rates might go and whether you can maintain your mortgage repayments. Then fixing your mortgage now is a serious consideration.
Again, it is worth noting that most lenders will allow a rate to be locked in for up to 6 months before an existing rate ends. So, if you have a fixed-rate deal about to end, now is the time to review.
Ongoing mortgage review process
With mortgage rates having fluctuated over recent months. MMPE have built in an ongoing review process for clients remortgaging. This allows clients to secure/lock in a new mortgage rate now; we then structure follow-up reviews prior to the completion of the new deal. Checking regularly whether the mortgage deal secured can be bettered.
The purpose of the review is to check whether better deals are available and assist in switching the deal if it is.
Sussed – Mortgage App
Our new mortgage app, Sussed, is another tool that helps mortgagees manage their mortgages. Sussed will monitor your property value and your mortgage, and it will let you know when savings can potentially be made. The intelligent app will show you the savings that can be made, even if you are within an early repayment penalty charge period.
Sussed also assists in storing your mortgage and property details and reminding you when it is best to review your existing deal.
My Mortgage Experts & Protection Experts Ltd (FCA 937076), is an Appointed Representative of King Mortgages Ltd.
King Mortgages is authorised & regulated by the Financial Conduct Authority (FCA). King Mortgages Ltd is entered on the financial services register http://register.fca.org.uk/ under reference number 803561.
The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
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Changes in property value, coupled with a potential reduction in your loan amount (with a repayment mortgage), mean a change in the equity available in your property (Loan to Value); hence there could be improved opportunities for a better mortgage for you.
Sussed will track when your mortgage is due to expire (usually when your mortgage payments rise substantially as you will automatically transfer to your lender’s standard rate).
The app will alert you when it’s the right time to discuss your options with your mortgage broker.
Sussed can help you plan.
This feature is ideal for today’s economy and increasing prices. Sussed will continually scan the market, looking for the best-fixed rates available, especially when interest rates are rising.
Using a series of algorithms, our clever technology can identify longer-term fixed rates available today that could save money against predicted rates at the end of your current product term (including the cost of transfer) – sussed is doing all the hard work.
With automatic property value updates and your Mortgage information loaded, this feature calculates the amount of equity and the maximum potential loan that may be available within a landlord’s portfolio. This will assist with seeing if there is the opportunity for to perhaps buy another property from leveraging your portfolio.
Within sussed, you will also be able to see each of your properties with a roadside picture, a confirmed property value, monthly rental, current mortgage balance, payments, interest rate and the Loan to value/Gross rental yield.
Sussed can help you manage your portfolio.
This feature is there waiting for interest rates when they reduce. Using the same technology as Rate Riser, sussed will identify if your current deal is now able to be improved.
Should the interest rates decrease, sussed will compare deals available on the day with your existing deal and flag if there is an opportunity for you to save money by switching.
There are price limits on homes you can buy with an equity loan. The limit is different for each region in England.