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Dundas Street - Edinburgh

No rise in interest rates

Today’s news that the Bank of England have decided not to raise the base rate will no doubt be music to the ears of homeowners and those looking to get on the property ladder.

But what does this decision mean, and should it encourage action from those currently on, as well as those looking to get on, the property ladder? We spoke to our Compliance & Quality Director Aaron Frizzel to find out more.

What does the decision not to increase rates mean?

Since March 2009, from a homeowner perspective, we have enjoyed historically low interest rates, allowing many homeowners to benefit from lower mortgage payments than had been enjoyed before the previous base rate changes up to March 2009.

Today’s decision not to raise the Bank of England base rate highlights that current UK economic performance has not yet provided reason to reduce monetary easing within the economy. This suggests that the market is not yet ready to return to how it was prior to May 2007 and it may be a while longer before we see rates return to ‘normal’ levels. Recent figures illustrate the economy’s growth to be extremely slow, hence the stagnating base rate which could well be the same throughout the remainder of 2018.

It is worth noting that, of late, we are still witnessing lender rate increases amidst recent talk of a base rate rise, typically the catalyst for lender activity. Will this continue, or will today’s announcement perhaps encourage lenders to continue with their fiercely competitive ways in favour of rate reductions in the coming months?

What does it mean for homeowners?

The stability of rates just now will have no effect on current homeowners and recent borrowers who opted for a fixed rate mortgage product, which has been the trend for the majority of borrowers for a significant period of time. Those with deals ending this year who were concerned about rising rates may have little to worry about, extremely attractive rates are likely to be available for the short term at least.

Those currently on a tracker mortgage, or those who are currently sitting on their lender’s standard variable rate, may also wish to think carefully about a remortgage to a new product, as now is a great time to try and lock in a low rate before any future changes are announced.

What does this mean for aspiring homeowners?

The news should be appealing to aspiring homeowners who are trying to get on the property ladder, as it gives them slightly more time to try and lock in a low mortgage rate in anticipation of a potential rate rise later in the year or next. Comforting times for those with a mortgage and those looking for their first, less so for savers, and so it continues………!

 

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Because we play by the book we want to tell you that…

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.

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