Interest Rates Are Rising

Interest rate riseInterest Rates Are Rising

In June 2022 the Bank of England increased the base rate to 1.25% with further increases expected throughout 2022 and into 2023. 

Experts are suggesting that the base rate could increase to 3% or even higher. The increase in the base rate is to try and curb inflation which is expected to be 11%

This has meant an increase in the rates being offered by mortgage lenders.

Here’s an Example
In January 2022 a first time buyer with a 10% deposit was offered a two year fixed rate of 1.74% by the Halifax plc. Today the best rate offered would be 3.38%. Nearly double.

So what options should you consider when applying for a mortgage ?

Careful consideration should be made when arranging a mortgage regarding the interest rate. If you want to fix the interest rate should it be for 2, 3 or 5 years or even longer.

Each option comes with pros and cons. 

If you fix the interest rate for two years you run the risk of having higher payments once the fixed rate ends. However mortgage payments will initially be lower.

If you fix the mortgage for 5 years you have the security of knowing what your mortgage payments will be for a longer period. However should you wish to borrow additional funds mid term you will tied to your existing lender to provide the funds or move your mortgage to another lender and most cases incur penalties for paying early.

Other factors you will need to consider when applying for a mortgage is how you protect the mortgage in the event of you becoming ill and not able to work, losing your job because of redundancy or worse case scenario death.

In a market where interest rates are increasing this becomes more important particularly if you have a family and people are dependent upon you. The last thing you want is that the people you love lose their home.

In a market where interest rates are going up getting independent professional advice is of paramount importance. You need to speak with an adviser who can look at the whole of the options available not just from one lender or from a limited panel of lenders.

Manchester Mortgages has been providing independent advice tailored to each individuals circumstances for in excess of 21 years with over 70 years of combined experience.

Contact us on 0161 706 0242 or email and we will be happy to discuss your situations