For the first time in over a decade the Bank of England has raised their base rate a quarter of a percent from 0.25pc to 0.5pc. This rate will have an effect on millions of households across the country as it will directly increase the rate of many existing mortgages as well as increasing the rates of future mortgages. This rise isn’t just restricted to mortgage rates, but will likely increase the rates of credit cards, personal loans and even overdrafts.
Homeowners who have tracker mortgage deals can expect their repayments to instantly rise. The average UK home and mortgage can expect a rise of around £22 a month in extra repayments. But what about the 57% of homeowners with fixed rate mortgages? Well, although the rise in interest rates won’t have an instant affect, it will have an effect when their term comes to an end, typically in two or five years from the start of the mortgage. Especially for those who fail to remortgage as they could find themselves on their lender’s standard variable rate, which are also expected to rise.
It’s believed by many economists that there will be a further rise in interest rates at some point next year, most likely by another 0.25pc. So if you’re thinking of holding off on purchasing a property, then you may want to have a rethink.
The good news is that the rise in interest rates shouldn’t affect property prices too much. Whilst the rise could lower confidence in the market, causing a slowdown in property prices, the market will likely bounce back. Early figures of property prices in October show that prices are still on the rise, and this is during a time when many homebuyers were aware of the upcoming rise in the Bank of England’s base rate.
If you would like to know more about the rise in interest rates and how it may affect you, get in touch with Norfolk Property Online. We can be reached on 01603 300900 or by email: [email protected]
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