The Bank of England will make another announcement about interest rates on September 15th. This gives homeowners looking to remortgage or purchase a new home one month to apply.
Following inflation hitting 10.1% in July, it is expected that rates will rise again as the Bank of England tries to slow the UK economy and force inflation back down. The current rate of inflation is higher than previously predicted by economists and the Bank of England.
It is likely that the Bank’s Monetary Committee will put rates up by 0.5% as inflation remains high due to the Ukraine conflict, rising fuel prices, and the disruption to the supply chain following the pandemic. Ideally, inflation should stay at around 2%.
If you are a homeowner and on a fixed rate term, you don’t need to do anything as your monthly repayment won’t change. However, if you are close to the end of your mortgage term (with up to six months left on your current deal) we strongly advise that you should start looking for a new deal now. Here at The Mortgage Hub, we can help to find the best available deal before the rate rise and will ensure it is suitable for your circumstances. Lenders can start to reprice their mortgage deals ahead of the next Bank of England meeting following the latest inflation news so it’s important to act now.
If you are on a standard variable rate, your repayments will increase when the rates rise, so you should also consider remortgaging. At present, according to Zoopla, the average standard variable rate is currently 5.17%. The average two-year fixed rate is significantly lower.
It’s important to check whether you have any penalties to pay for moving from a variable rate or tracker mortgage to a fixed rate. If you have a high fee, it may not be worth switching.
If you are considering a remortgage, we advise that you do this as soon as possible as mortgage deals are typically available for around 2-3 weeks before they are withdrawn.
Talk to us at The Mortgage Hub for advice on the best mortgage for your circumstances.