Mortgage rate rise on the way!
You may have missed it but the Bank of England after 10 years, raised the interest rate. This means that anyone on a variable rate mortgage will probably experience a mortgage rate rise in the very near future. With mortgage costs being probably the biggest single bill you have, are you ready?
We’ve taken a look at what this might mean for you so watch our video and read on for our take on it.
What does this mean for you?
43 percent of homeowners are on variable rate or tracker mortgages. This means when the Bank of England changes the rate, your bank or building society will pass that on to you. The result is a rise in your monthly expenditure in the lead up to Christmas. This also comes at a time many UK households are experiencing a real terms wage freeze. With food prices rising as well, are you ready?
“Household budgets are under pressure from the fact that wages have not been rising as fast as the cost of living,” said Nationwide’s chief economist, Robert Gardner. “Indeed, in real terms (i.e. after adjusting for inflation) wage rates are still at levels prevailing in 2005.”
What can you do?
It might be too late to beat the rate rise with a fixed rate mortgage but it might still be worth looking into. Further rate rises are expected and now that the B.O.E. have started the process, they could follow pretty quickly.
What is a fixed rate mortgage?
A fixed-rate mortgage (FRM) is a type of mortgage where the initial rate of interest is fixed for a number of years. Often between 2 and 5 years but sometimes much longer. These types of mortgages are likely to have a slightly higher interest rate than your current deal. The great thing is, the repayments will stay the same for those years. This makes your monthly bills predictable and protects you from further rate rises which are likely.
Budget, budget, budget!
You also need to start budgeting if you haven’t already. To stay on top of future rate rises, you’ll need a bit of spare money in your budget. Get used to working out much you would need to keep aside if the rate was 1% higher than it currently is. That way, when it rises again, you’re already ready!
If you’re really stuck with a short term income reduction or other financial emergency then try our loans today.