News reaches eddge towers today that the Bank of England has estimated that around 40% of all mortgages in the UK will increase in cost in the next 12 months. Given the fact that more or less everything is increasing right now, it probably comes as no surprise to most of you, but we thought we’d dive into the detail.
Sarah Breeden, the Bank of England executive director for financial stability strategy (quite the title), was speaking in a Treasury Committee Meeting on Monday when she divulged the bank’s thoughts. She said that the 20% of mortgages on variable rates will naturally see interest rate rises come through and that of the 80% that are on fixed rates the data suggests that a quarter of those will expire in the next 12 months.
Of course, as with most statistics, there are two ways to look at this. The positive spin is that 60% of mortgage borrowers will not have to cope with an increase in their monthly payments for the next 12 months and that maybe the world will have calmed down a touch by then. Maybe. The negative spin is that, for nearly half of us, we’re going to be paying more each month, at a time when we are paying more for, as we signposted up front, absolutely everything.
Fixed rates are, yep, you’ve guessed it, rising
While we’ve got you, other news of note was the publishing of some data from Moneyfacts, the self-titled money comparison experts on the average cost of fixed rates. They have found that the average two- and five-year fixed rate mortgage have increased sharply this month as lenders continue to revise and reprice their products. Looking at the two-year market, the average rate has risen for a ninth consecutive month. It now stands at 3.74%, which is a month-on-month increase of 0.49%. Reasonably punchy.
It’s really important to note that there’s another factor in why rates are this high. And that’s lenders, to be colloquial, playing the game. When they get too busy, they ramp their rates up to stop the flow of cases. Then others follow because no-one really wants to be at the bottom right now. But, what this does mean, is that they could well come down soon as well. As ever, we'll keep you posted.
We’ve now got to the point where generic advice is simply not worth the paper it is printed on. We realise that we’ve got a rather large, vested interest in saying this, but borrowers must take advice on their own situation. We’d love you to do that with us, but do it with someone, no matter what. There’s so much to consider. Do you take the longer-term view and just lock into something for the long term to ride it all out? Do you take a short-term fixed rate in the hope that when you come to remortgage again things are looking better?
Or, do you just pick up the phone and give us a call to talk it all through. Yep, that’s the best route. Hopefully speak to you soon. If you fancy it.
Comentarios