Rise in interest rates – what does this mean for mortgages?
With so many possible blog topics to cover on the Applegate website, it’s perhaps not surprising that we rarely touch on the activity of the Bank of England! However, an interest rate decision made last week will inevitably have an effect on mortgages and savings rates.
Many of you will have never seen an interest rate rise in your adult life, as it is the first in over a decade. As a result of the change, we’ve put together some advice to share with our customers…
- Most lenders set aside a portion of money – known as a tranche – which they are willing to loan at the current rate, so the good news is that for the next couple of weeks there will be a window of opportunity to get the best deals currently available, until the tranche is gone.
- It’s important to double-check whether you are overpaying on your mortgage at present, to ensure you are on the best possible deal available to you.
- If you’re on a fixed-term mortgage you won’t see any immediate change, so there is no need to worry about a rise in repayments until the term has ended. But it’s a good idea to get ahead, by locking yourself into a competitive mid-term fixed rate deal as soon as possible.
- Take two minutes to search for the best possible deals using Martin Lewis’s ‘mortgage best buys comparison’ at https://www.moneysavingexpert.com/mortgages/best-buys/, which includes all the deals that will be available to you.
- Your credit score has never mattered more than it does right now. Finding a cheap deal on its own is not enough, as you need to be accepted, and your credit history is the main deciding factor in this – Martin Lewis’s ‘free credit calculator’ will determine your score, and provide you with tips on how to boost it: https://www.moneysavingexpert.com/creditclub
- It may be worth sourcing an independent mortgage broker, as they can help match your circumstances with deals that will accept you, as they have access to information that isn’t available to the public. Two good websites for finding someone suitable are: https://www.unbiased.co.uk/ or https://www.vouchedfor.co.uk/.
However, there is some good news to the increase in interest rates for savers! Low interest rates have unfortunately punished this group in the past, but it’s great for them that we have seen this rise. You could consider moving banks if you’re not currently getting the best AER that is available. And, if you’re prepared to lock your money away without instant access, you can earn even more.
We hope these tips have helped to settle your nerves and plan your next steps for your mortgages and savings accounts. Remember, it’s not all bad news and there are also plenty of places (see below) to get great advice!