Headlines, headlines, headlines!
You’ve seen them: ‘House prices rocket!’
‘Mortgage rates shooting up!’
It’s enough to terrify the life out of anyone thinking of buying a house or, indeed those already owning one.
So what is the truth behind all the shock, horror headlines?
Well, despite the Bank of England putting off any increase in the base rate – the rate upon which mortgage lenders set their lending rates – many people still believe an increase is coming any day soon.
To such an extent that some lenders have already started to sneak up the rates they charge borrowers.
At the start of this month, Barclays, HSBC, NatWest and TSB all increased the interest charges on their products.
So where does that leave both people looking to buy their first home and those already with a mortgage?
People thinking of getting on the property ladder shouldn’t be too put off. Interest rates are still low and there are some good deals to be had, especially if you have had the time to save a decent deposit.
The problem first-time buyers face is the price of the property they want to buy. These have been rising for some time, as demand exceeded supply.
If there is a modest increase in interest rates, it might not be such bad news for first-time buyers.
The property market has been booming in recent months and there is a real danger that these folks will be priced out of the market. A slight downturn in the market might just steady prices and give them a chance to get on the ladder.
We need them to, as a buoyant housing market relies on first-time buyers to keep properties moving all along the price spectrum.
And what about everyone else?
For those already with a mortgage, it might be a wise time to fix your rate if you can.
If you are coming to the end of an existing deal or are on your lender’s standard variable rate, you will be able to choose yourself a new fixed-rate product. Even if you don’t fit either of these criteria, you can still switch to a different mortgage by remortgaging, but you would face paying a fee to do so.
Whilst lenders have been increasing the rate of their fixed-rate mortgages, they are still a sensible choice, particularly if you can fix your mortgage for a longer period – say five or 10 years.
A fixed-rate mortgage will protect you from any future rate rises and give you the peace of mind of knowing each month what your mortgage bill is going to be.
The best bet is to get advice on your mortgage options before you press head.
For a free, no-obligation discussion on any mortgage or insurance-related issue, please give me a call on 01723 384558 or 07767 692 653 or email me at mgrayshan@googlemail.com