Those who are currently on a variable rate mortgage and haven’t yet made the move to a fixed rate may need to move quickly. Many high street lenders have already increased some fixed rates this year, especially in the two year market, meaning the opportunity to secure a low rate mortgage may not be around for much longer.
But what has led to this increase in fixed rates, considering the Bank of England rate has remained at 0.25% since August 2016? Some would say the following influential factors have played a big part:
- Inflation is expected to rise past the Bank of England’s official target of 2% later this year. This, along with a weak pound will have an impact of increasing variable rates. As variable rates increase, so will the fixed alternatives, meaning moving to a fixed rate now is a very attractive option.
- From January 2017, we have already seen many lenders increase the percentages applicable to their range of fixed rate products; does this suggest further increases are to come? Many would say so.
- The effect of Brexit and the recent triggering of Article 50 has started at least two years of financial uncertainty for Britain and many believe that choosing a fixed rate product for five years or even longer may be the way forward to predict one element of household’s outgoings, at a time where financial uncertainty is rife. Lenders are aware of this and may take advantage of increasing their rates over the longer term, five years and more.
- Some have suggested that the recent changes announced in the Spring Budget, which seen increased tax and National Insurance payable by the self-employed will reduce the amount of borrowing offered by lenders to such individuals, as the additional amounts payable will reduce the net profit generated and in turn reduce the borrowing capacity of the individual. Due to this, staying put and securing a fixed rate now maybe a sensible move.
These are just some of the reasons why it is so important to regularly review your existing mortgage to make sure it is right for your constantly changing needs in an ever changing financial world.
At David Allen Financial Services our Mortgage Advisers search the whole of the market, so you don’t have to. We’re impartial and will find the right mortgage deal for your circumstances, saving you the hassle of shopping around. What’s more we will arrange your mortgage wherever and whenever it suits you. Whether you prefer to meet face to face or liaise with us by telephone or email, we will work with you at a time and place that is convenient to you.
At David Allen Financial Services, the client wins every time so whether you’re looking for your dream home or buying an investment property as part of your retirement planning, we will help you to fund the purchase with the right mortgage deal. Contact one of our Mortgage Advisers to arrange your FREE mortgage review on 01228 711881.