Mortgage holders are braced for the biggest interest rate rise in 33 years, which will put a combined total of £3bn extra on the cost of mortgages in the UK. It is being widely predicted that the Bank of England (BoE) will hike interest rates by 0.75 percentage points in the next few days, raising the overall rate to 2.5%, The Guardian reports.
The move is designed to tackle soaring inflation, but this is little comfort to those coming to the end of their current mortgage deal, or for first time buyers applying for a new mortgage. It will also seriously impact those on a standard variable rate or tracker mortgage. It is predicted that the average monthly mortgage repayments could rise by £200 per month.
One financial expert commented: “For anyone who is already struggling with runaway price rises, the extra cost of the mortgage could be the final straw.”
They added: “While anyone with a fixed rate is currently protected, all these rate rises will be adding up and hit them in one fell swoop when it’s time to remortgage. If you have less than six months left to run on your mortgage deal, it makes sense to lock in a new fixed rate as soon as possible, ahead of potential rate rises.”
If you are considering buying your first home at the moment, one good piece of news is that the overheated property market which we have seen over the last two years is finally beginning to cool off. It is no longer a seller’s market as the cost-of-living crisis is starting to filter upwards towards middle- and higher-income families.
Some financial experts have questioned whether hiking interest rates, thus making life even tougher for millions of householders, is the right way to tackle the looming economic crisis.
Another expert commented: “It’s clear that something needs to be done [about high inflation] – but is this the way? The latest interest rate hike is being closely followed by a new, higher energy price cap, further compounding pressure just as we head into the cold winter months.”
The continual onslaught of rising bills, from fuel to energy to food, is going to send some families beyond breaking point. If you reach the point where you just can’t find enough money to cover your monthly mortgage repayments, the first thing you should do is speak to your lender and explain the situation.
They may be able to offer you an arrangement to help you until you are in better circumstances. This might include arranging for you to make reduced payments for a temporary period, or even deferring the payments completely.
Another option may be to extend your mortgage term, so you stretch the payments over a longer period of time, reducing the amount you pay off each month. You may even be able to switch to a different type of mortgage, which offers you a better rate of interest.
If you would like to talk to an IVA mortgage broker, please get in touch today.
Your home may be repossessed if you do not keep up with your mortgage repayments.
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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