Interest rate warning from our in-house mortgage expert Mike Shakespeare

by Alexander Beard, on Aug 26, 2015 4:13:25 AM

_D4A1972 Mike

The possibility on an interest rate raise has been a hot topic this week with the vote by the Bank Of England Monetary Policy Committee being 8:1 for holding rates. This became greater news when it became apparent that another member has seriously considered voting for a rise.

Clearly this is of little consequence if you are considering, or on a tracker Mortgage, as these will react to any rate change usually the following month. However for those considering a fixed rate or on a variable there are things to consider.

Some lenders such as the Nationwide had a minimum variable rate “floor”, in their case 2%. For some of these borrowers there may be no rises for a while as the rate may need to increase past the 2% mark till the rate is increased. With Variable rates it is at the discretion of the lender rather than automatic as in a tracker rate.

Other borrowers such as landlords with Buy To Let loans should consider the risk that prolonged increases to their Mortgages may negate any profits they have been receiving over and above their mortgage and find they may have to contribute to the payment as the rent received is no longer sufficient. This proved a problem in the late 2000’s for landlords with multiple properties.

With 5 year fixed rate mortgages without fees available at very low rates you may consider now to be a sensible time to sit down and have a chat with one of our advisers’

The Financial Conduct Authority does not regulate Buy to Let Mortgages.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Mike Shakespeare
Financial Planning Associate