Whether you’re a first-time buyer applying for your first mortgage, or you’re already a homeowner, you’ll know there’s a lot of news coverage about interest rates, inflation and mortgage loans right now.
The Bank of England has hiked interest rates to a 14-year high in a bid to combat rising inflation amid the cost-of-living crisis. In January of this year, the base rate was 0.25%. Since then, it has gone up incrementally and is currently 2.25%, adding significant costs to borrowers in the process.
So, if you’re thinking of moving, or your mortgage terms are coming to an end, it is likely you will feel uncertain about the best way to navigate today’s quickly evolving property market.
How are increasing interest rates affecting the property market?
Rightmove data has shown that 61% of active home movers have indicated that rising interest rates are a top factor for putting their home on the market now, with newly released analysis from the property portal revealing that around half of active home movers believe that they would achieve the best possible sale price for their home this year instead of next.
The increase in interest rates is no doubt driving homeowners to sell now rather than wait until 2023, boosting housing stock across the UK and helping rectify the recent imbalance between supply and demand.
Rightmove data reveals that the number of properties for sale is 9.6% higher than a month ago, while listings are up 16% annually.
Borrowers that act quickly stand to save a lot of money, whilst taking advantage of the current increased buyer pool as well as racing to lock in more favourable mortgage rates.
Home movers are also likely to be encouraged by the additional saving on Stamp Duty as announced in the Chancellors budget in September.?
Ashtons' Sales Director Nick Wearmouth remarks, "After 13 years of historically low-interest rates, we are now returning to an environment that for many years would have been seen as normal. Significant opportunities exist in the current market for buyers to secure the right home for them as stock availability has greatly increased allowing for people to mitigate the additional cost by carefully planning a move from their own individual financial situation."
How will the increased interest rates affect your mortgage?
As is customary when interest rates rise, mortgage lenders will also review interest rates on their products. This will have an impact on the monthly mortgage repayments for some borrowers, who may see their repayments increase.
Why are some mortgages set to rise while others remain unaffected, we hear you ask. The answer lies in the type of mortgage you’ve taken out, and whether you’re locked into a fixed rate of interest versus a variable one.
If you’re a first-time buyer, moving home, or re-mortgaging, it’s likely you’ll be impacted by the changes. If you have a fixed-rate deal, the good news is that it will be business as usual, and your monthly repayments won’t change, at least until your current deal ends.
In times such as we’re experiencing now, a fixed-rate mortgage can protect you from sudden interest rate rises. We highly recommend that if you’re on a tracker or variable mortgage, you shop around to see if you can find a cheaper option with a fixed-rate mortgage.
Our mortgage experts, Ashwell Mortgage Services, will be able to look at your entire financial portfolio and find you the most competitive deal for your circumstances, across a panel of lenders. Taking interest rates, product and valuation fees into consideration, they will be able to make recommendations that offer you the lowest possible monthly repayments for a term that best suits your needs.
If you are considering buying or selling a home during these times of change and would like to speak to an agent about how to best navigate today’s property market, please get in touch today. We’re here to help.
