The Bank of England announced a 0.25% increase in the base rate in the middle of March.
This was bad news for anyone with a tracker mortgage, or on their lenders standard variable rate, as it would mean yet another increase in repayment costs.
Around 1.4 million homeowners on variable or tracker rate mortgages may be cursing the Monetary Policy Committee of the Bank of England.
But those on fixed rate deals have reason to celebrate. Not only are they protected against increases until the end of their fixed period, the price of fixed rate mortgages may actually be falling.
This is because lenders base fixed-rate deals on forecasts of future borrowing costs. According to financial commentators some of whom are suggesting the UK is looking close to a peak in rates and it may just be possible that the latest rise may be the last. The rise to 4.25% has already been factored into mortgage deal pricing. However, the rate in the reduction in UK inflation will be monitored by the Bank of England and if the anticipated reduction does not materialise, then this may place more pressure to raise interest rates further.
So even if some borrowers are facing higher repayments, others may be able to welcome a reduction in their outgoings.
By considering re-mortgaging to a fixed rate could be a
solution to get your mortgage repayments under control, however be aware there may be additional costs to consider when re-mortgaging.
A call to us at Continuum could help you see the possibilities.
But if mortgages might not be a problem they first appear, what about house prices?
House prices are complicated…
There have actually been increases in asking prices reported in some areas in the last few months. But it is probably safe to say that the days of constantly growing house prices were numbered as soon as the Bank of England started hiking the base rate up from its historic low of 0.1%
Even if there are some better deals to be had on mortgages now, overall, mortgages will still be much more expensive than those of a year ago. The jump in mortgage costs reduced affordability, meaning that house price inflation is probably over.
But will it go on to mean house price falls?
There are other factors to consider.
There is the matter of confidence. People are happy to stretch themselves when the economy is buoyant, and jobs are secure. Inflation has left many people struggling, and worried about the future. However, unemployment is still low, and the worries about recession seem to be receding.
The collapse of Silicon Valley Bank and Credit Suisse suggest that there are some dangers for the global economy, but the financial establishment has probably learned the lessons of the last financial crisis.
Then there is the matter of supply and demand. It looks as though the market has slowed considerably, with fewer would-be buyers. A market slowdown might trigger price falls, but only if a sufficient number of people selling homes are desperate for a quick sale. If the economy remains on the even keel now predicted by many observers, few homeowners will find themselves forced to sell up.
If financial problems have hit your plans, call us at Continuum. We may be able to help you find solutions.
What about buy-to-let?
The picture might not be so positive for buy-to-let investors.
Landlords may be facing losses as increased mortgage costs and taxes threaten the buy-to-let business model. Buy-to-let lenders tend to be more exposed to interest rate rises than home buyers.
A growing number of landlords are finding that they are no longer making a profit and getting out of the market.
At Continuum we can source mortgages for buy-to-let investors. If your current mortgage is costing too much, a call to us might find a solution.
One thing you can be sure of – if you are looking at the price of your own home or considering a purchase, you need an expert to help with your mortgage needs.
At Continuum we will be very pleased to provide the expertise you need.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable mortgage product, you should seek independent financial advice before embarking on any course of action.
Your home or property may be repossessed if you do not keep up repayments on your mortgage or other loans secured on it.
You may have to pay an early repayment charge to your existing lender when you re-mortgage.
The Financial Conduct Authority does not regulate some aspects of buy to let mortgages.
The Financial Conduct Authority does not regulate taxation advice.
The levels and bases of taxation are subject to individual circumstances.