For the first time in more than ten years, the Bank of England have raised interest rates. But, there is no need to panic, the new rate of 0.5% still remains the second lowest rate on record.
For the 5 million borrowers on variable rate mortgages, some increase in their monthly mortgage is to be expected. Our research shows that The Nationwide estimate that the 0.25% rise will increase the monthly mortgage bill for homeowners with a £175,000 mortgage on their base mortgage rate deal by £22.
While a number of banks and building societies have already announced that they will pass on the rate increase to borrowers, the impact of a rise will be minimal. UK Finance report that over the last two years, over 90% of new mortgage and remortgage loans have been on fixed rate deals. Over half of all outstanding mortgage loans are now on fixed rate deals. However, the introduction of the Mortgage Market Review in 2014 means that borrowers are more prepared for a rise than they might have been in the past. UK Finance estimate that, of mortgages lent since 2015, 92% were stress tested for an interest rate of at least 3% above their current rate.
Rachel Cornes is our in-house Mortgage Consultant and available to advise on all aspects of mortgage maze from new purchases to remortgages. Speak to her on 01509 610710
For the housing market what does this mean? We have noticed house price increases slowing and 'levelling of over the last few months and this is simply a natural occurance of the market cycle. A stable property market where prices have levelled is actually a good thing for the medium to long term as buyers and sellers take confidence from knowing they have both sold and purchased in the same market conditions.
Essentially the property market is built on confidence. From what I'm hearing and experiencing, despite the overhyped predictable and consistently negative press, our economy is in good shape, UK and particularly Midlands employment is high and there is an ever growing need and strong demand for properties in all sectors of the market across Loughborough and Charnwood.
Call us to arrange an updated FREE PROPERTY VALUATION on 01509 611119
RICHARD MORRIS MNAEA