It is an interesting time for mortgage rates. When I wrote last month of the Mortgage rate merry-go-round, the Monetary Policy Committee (MPC) had yet to sit and discuss their next rates move.
As we now know, with a majority of 7:2, the MPC decided on 22nd June to hike another 0.5% onto the current rate, taking the Bank of England base rate from 4.5% to 5%.
In line with this, the available mortgage rates have inevitably increased and homeowners on variable rate mortgages, or just about to come off their fixed rate deals, will see an increase in their monthly repayments as lenders pass on the increase. Such an increase is becoming increasingly difficult to stomach for the majority of the general public and there is a wonder if and when this monetary policy will stop.
If your fixed rate deal is coming to an end then you are likely very worried about your rate increasing two or three fold compared to your current rate. Whilst you are right to be concerned there is help available from professionals. We would advise you speak to a mortgage broker as it may be more appropriate for you to look at switching now to avoid further pain. There will often be a better option than just accepting your lender’s current rate and its imperative that people explore the market in order to save what could be thousands of pounds.
If the repayments are not affordable then you may be considering placing your house on the market for sale. When considering this you would be best advised to speak to a number of local agents who will be best placed to discuss your options and value your home appropriately to ensure you give yourself the best chance of a sale at the best price possible.
If you need to sell, you may find some value in the new build development market. Developers often have incentive deals available, such as 100% mortgages which might make a move more palatable, as well as incentives which sometimes can include money off the list price of a house, deposit contributions, help paying your legal or stamp duty costs and money off extras to name but a few. Often it is worth considering this market if you are looking for a deal. Secondly, new build properties where the planning permission is 2022 onwards tend to come with EV charging points, perfect if you have gone green with an EV.
If you are unfortunate to be on a variable rate mortgage, then please don’t suffer in silence. There are people out there who can help you and its important to take the correct advice. A number of mortgage brokers and financial advisors whom we deal with have stated that the market is ever changing with products sometimes being withdrawn without notice, so it really is important to act quickly.
With a high percentage of homeowners still on a fixed rate deal, Bank of England Governor, Andrew Bailey’s, idea that aggressively increasing interest rates will reduce spending probably won’t have as much of a rapid effect on kerbing spending as he’d hope.
Other economic drivers will be needed to assist to bring the current high inflation rate of 8.7 (at end May 2023) down to the Bank of England’s preferred 2% but this will take time, years in fact. The Government target for the end of 2023 is to have inflation fall to 5%. In achieving this we are likely to see further rises and thus further strain on the mortgage market and generally the housing market.
We’ll be carefully keeping an eye on developments and keep you posted on our thoughts on what trends mean to you, or to your property portfolio.
If you are affected by the above get in touch and we can guide you through to help make the buying and selling process as simple as possible. Furthermore, if you need help in obtaining a new mortgage deal, or want to be put in touch with a reputable agent or surveyor then we do know a number of the same whom we would be happy to pass you onto.
By Jonathan Wall, Partner and Head of Residential Property
Dated 3rd July 20223
