The Bank of England has confirmed that the base rate is now 2.25%. The base rate is an extremely important factor here in the UK as the Bank of England uses this number to control the rates of inflation. Not only this, but this rate also helps to ease the rapid increase of the prices of everyday things such as fuel and food costs.
This number is always under review by the Bank of England to ensure that it stays within the government’s target when it comes to inflation rates. This base rate helps to change people’s spending habits, when the base rate increases people tend to spend less.
The base rate can only be changed when the Bank of England attend meetings which are organised by the Monetary Policy Committee. Typically, these meetings are held around 8 times a year, however, in certain circumstances such as financial crises, emergency meetings can be held. Making predictions on when the base rate will change is extremely challenging and the Bank of England try to predict these changes throughout the year as they express whether they believe the rate will rise or fall.
This base rate also affects any interest rates that have been set by Banks or Building societies. This can affect you through the rates you have on your mortgages, loans, or any savings accounts that you may have. This means that if the base rate drops, it is likely that the rates of your mortgages and loans will too. Unfortunately so will the rates on your savings. If the base rate goes up, then you can expect your lending to also rise, but on a more positive note, your savings rates will also increase.
How does this affect your mortgage?
Well, if you’re currently on a fixed rate, there is no immediate change – you are tied in until a certain date meaning your interest rate and monthly payments will stay the same. However, when your current product comes to an end, you will usually be placed on a variable rate – which is now likely to increase. We would recommend reviewing your mortgage around 4 months before the product is about to finish, that way, you have time to speak to a mortgage adviser, consider your options, get the right advice, and apply for a new product with enough time. If you’re in that timeframe now, complete an enquiry form selecting the option “Remortgage a property” and one of our experienced advisers will be happy to help. You can also call us directly on 01423 611004 Option 2.
If you’re on a variable rate, now is the time to contact us! Your rate may increase, depending on who your current lender is, meaning your monthly repayments will also go up. Your lender should notify you that this change is happening, and what it will mean for your payments. You can benefit from our advice today, by filling an enquiry form and selecting “Remortgage a property”. You’ll also receive an email with a link to book a telephone appointment in an adviser’s diary.
We’ll be sure to keep you updated with any other changes in the future, but for now, it’s worth checking your current product to see if there’s anything that can be done and contact us for advice.
Are you a first-time buyer?
Whilst you won’t be able to secure an interest rate or mortgage product if you haven’t found a property, it may be time to start preparing for what’s to come. We know how the market is right now; lot’s of competition from other buyers, waiting lists to view properties and offers going in way above the asking price. Have a chat with an adviser to see if they can obtain a Decision in Principle for you. It can put you in a more preferential position when booking viewings with estate agents or speaking to new home builders. Having a Decision in Principle (sometimes referred to as a Mortgage or Agreement in Principle), can make you more attractive than other potential buyers, as they can see you’ve already engaged with a mortgage adviser and know your potential borrowing amount for a mortgage. Contact us today for an initial chat about your options, or learn more about being first time buyer.