Recently, the Bank of England has raised their key interest rate from 0.5% to 0.75%. This was the third time they raised it, and due to the fact that oil prices have soared up, caused no less by the Russia-Ukraine conflict.
That being said, regardless of the cause of the increase in key interest rates, how does this change of interest rate affect you? Well, if you’re purchasing estates, it is vital to know that such change has a huge impact on that, along with mortgages.
How Can The Increase Of Key Interest Rates Affect Mortgages And Estates?
Mortgage rates depend on interest rates, and that is a fact. So when the interest rates go up, so will the mortgage rates. At the same time, estates are long term plans, so they tend to be affected by the change of interest rates. People tend to change their plans in relation to their financial situation, so if the interest rates are higher, people are more likely to postpone buying estates.
Apart from those who already own estates, those in the process of owning estates may still take years before being achieved. The changes in interest rates can make them more difficult to reach. The increase in key interest rates can force you to change your plans for buying estates, delaying being able to fully pay for the estate and more.
That said, it is important to note that this change of key interest rate isn’t going to affect everyone. Such a group of people are those with a fixed deal. This means that the interest rates they are working with right now are fixed. That is, until their deal expires, in which they will be forced to work with new interest rates.
For those that are on a variable exchange rate, however, the news isn’t good. Variable rates are generally based on the key interest rates, so a change done by the Bank of England, particularly an increase, will also mean that variable rates will also increase.
What can you take away from this? It’s quite straightforward, actually. If you are looking for a new deal, it may be a good idea to opt for fixed interest rates. This is because, with how chaotic events have recently been, an increase in key interest rates may be what’s in store in the future and more. That being said, if you are on a mortgage right now, it is vital to reach out to your lender to review your remortgage position. This is because you will be incurring extra costs if you are on variable rate mortgages, and that’s the last thing you want to deal with when trying to save money buying expensive estates.
Conclusion
All in all, key variable rates can change at any time, but one thing’s for certain: you will be affected. If the change in key interest rate has worried you or affected you, do reach out to your lender. Discuss with them how the change may affect you and work with them to figure out a new plan if need be to ensure you can continue affording mortgages to pay for your estate.
A Move Brokers offer a wide range of mortgage products to help individuals access the best deals needed to meet specific needs. If you are looking to apply for a mortgage in Chester, get in touch with us today!
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.