Interest rate rise could mean an increase in your mortgage payments

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Over four million homeowners will see their monthly mortgage repayments rise following the announcement that the Bank of England has increased interest rates for the first time in over 10 years. Interest rates have risen to 0.5% from 0.25%, reversing the emergency action that was taken immediately after the Brexit vote.

The move by the Bank of England comes amid householders increase in rising prices, which is outstripping the growth in earnings, following the devaluation of the pound since the EU referendum.

The average rise for those on a variable rate will £22 per month, although the recent popularity of fixed-rate mortgages (due to the competitive deals that have been available) means it will initially affect less than half of households.

The Governor of the Bank of England, Mark Carney, has reassured consumers that it wasn’t the start of a sustained upward trend in rates. He stated:

“To be clear, even after today’s rate increase, monetary policy will provide significant support to jobs and activity. And the monetary policy committee continues to expect that any future increases in interest rates would be at a gradual pace and to a limited extent.”

According to The Telegraph, experts are expecting two further quarter-point increases in interest rates by 2020, which would leave them at 1%.

The rise in rates has raised questions over the ability of homeowners to repay their outstanding loans given that there has been a steady rise in personal borrowing and credit cards in order to offset higher prices.

According to accountancy firm Moore Stephens (The Telegraph) over the first year of this rate rise, households are expected to face around £1.8m in additional interest. In addition, Moore Stephens has estimated that households will pay around £465m in additional costs on credit cards, overdrafts, personal loans and car finance as a result of the rate rise. In fact, in recent months there have been some signs of consumers using their savings or borrowing money via bank loans or on credit cards to keep up with day-to-day spending.

On the flip side, savers will benefit from the rate rise, with the increase in rates already being passed on by some banks.

If you would like to find out how the recent rate rise will affect you, contact Derngate Wealth today.

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

– http://www.telegraph.co.uk/personal-banking/mortgages/happens-fixed-rate-mortgage-ends/

 

 

What an interest rate rise could mean for you

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

For the first time in a decade, the Bank of England has hinted that there will soon be a rise in interest rates.

Bank of England’s rate-setting committee member Gertjan Vliegh has argued for a rate rise to be put in place in the next few months in a recent speech to the economists in London.

If interest rates were to rise, there would be a rise in householder’s monthly bills, provided they have variable or tracker mortgage. For those on a fixed rate mortgage, although they are protected, their mortgage will rise once the deal comes to an end. If you are on a variable rate there will be a buffer in place to help you to cope with an increase in rates.

The rise in costs will all depend on the terms of the mortgage. The average standard variable rate mortgage at present is 4.6% according to Moneyfacts. Those with a repayment mortgage of £200,000 would pay an extra £28.72 based on a mortgage term of 25 years, if rates rose by 0.25%.

With a rate rise possibly imminent, now could be the time to remortgage onto a fixed deal or take out a fixed rate mortgage if you’re about to buy a property.

For savers, this is great news. The average saving account pays just 0.4% interest, down from 1% five years ago. We have had years of rock bottom rates, with a £20bn fall in the amount invested in the last 12 months alone. However, the expectation is that many banks will want to be seen to be passing on the full rate rise to savers.

If you would like advice on how any rate changes could affect you, contact Derngate Wealth today.

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

https://www.theguardian.com/business/2017/sep/15/uk-interest-rate-rise-what-it-could-mean–savers-mortgage-holders

 

How to beat lenders’ rate rises

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate on the number above.

Mortgage rates are rising and the latest data from the Bank of England shows that for the first time in what has been a comfortable period for borrowers, fixed rates for two and five-year mortgage are slowly rising.

A rise in rates has been widely predicted for well over a year now and especially as capital markets started to reflect the higher borrowing costs between banks in the days following the election of Donald Trump as US President back in November. This has now filtered through to the consumers into higher rate mortgage costs, with the largest increase seen with long term fixed rate mortgages.

Generally consumers don’t switch bank accounts and chase the better interest rates, especially as the rise is incremental.

With regards to savings, even though rates are going up banks will continue to pay no interest on the savings held, even though they can reinvest the deposits. It’s not all doom and gloom though, as although average rates are dropping, some smaller banks have started to increase their payouts. In fact, around 30% of savings accounts saw a rate rise in January but these rates are coming from much lesser-known banks rather than the trusted popular high street names. This is because the smaller banks are trying to attract new customers in order to grow whereas high street banks don’t need to work too hard to attract savers.

Meanwhile, banks have been increasing the margins they have been taking on their mortgage lending, as the interest rate cuts following the crisis allowed them to do so.

So what does this mean for borrowers?

Borrowers should remortgage their homes to ensure that they can capture the low rates, especially as your existing mortgage could become more expensive very soon.

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

Talk to Derngate Wealth for information on getting the best interest rates and the options when it comes to remortgaging your property. We can advise you on whether this is the right strategy for your circumstances and future plans.

If you would like more information on how a rise in mortgage rates may affect you, please contact Derngate Wealth today.

http://www.telegraph.co.uk/personal-banking/savings/rates-rising-can-beat-banks/

UK lenders could move operations overseas

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate on the number above.

According to the British Bankers Association chief executive Anthony Browne, the future of residential mortgage lending will be drastically changed for the worse if the major lenders were move their operations to outside of the UK.

Mr. Brown wrote in the Observer that most international lenders are deciding which operations to move outside of the UK and that they are on the cusp of making this decision. He also wrote that the smaller lenders could move before Christmas this year with the larger lenders soon to follow.

Association of Mortgage Intermediaries chief executive Robert Sinclair has also said that the current limits on trade borders with the EU would have a knock-on impact on the mortgage industry. Banks need to be able to trade cross border within Europe with no limitations and this has been integral to the mortgage industry and by leaving the EU this will be affected.

It’s not predicted that banks will leave the UK entirely, but many aspects of their operations will do so. Mr. Sinclair has stated that “The ability to trade capital, funding, swap and derivative products supports the wider world economy as well as our own” and that “ any threat to this risks limiting the ability of our largest UK Banks to support the domestic economy in the same way.“

Although we are unsure of when the UK will leave the EU, especially after this week’s news regarding Article 50, Mr. Sinclair says that we “cannot ignore the fact that changes to how these major banks operate has the potential to restrict the future funding of UK residential mortgage lending.”

Adam Tyler, Chief Executive of The National Association of Commercial Brokers believes that bridging the sector would be resilient in the case of lenders moving their operations to outside of the UK. He says “Bridging is a specialist sector that operates relatively independently of the major banking institutions, and if anything, the departure of big name banks could thrust alternative finance even further into the spotlight. It’s worth noting that the current bridging industry grew out of the ashes of the global financial crisis when many mainstream banks effectively shut up shop. In other words, any uncertainty on the high street often benefits the bridging sector as it becomes more visible and demand from borrowers increases.

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

If you would like more information on how Brexit may affect you, please contact Derngate Wealth today.

Fears for funding of mortgage lending should banks leave UK

The effect of Brexit on the housing market

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate on the number above.

The Royal Institution of Chartered Surveyors (Rics) has released figures showing that confidence is returning to the housing market following the vote to leave the EU in June, and that as a result house prices are set to rise.

After the vote on June 23rd, Rics had forecast a sharp fall in house sales and house prices, with the view that members were more pessimistic than they were at any point since the 1990s.

Rics, which is seen as a key market indicator, has now forecast that as the shock of Brexit has receds we are looking forward to an annual 3.3% increase in house prices year-on-year over the next five years.

In London in particular, there have been more house price drops reported in comparison to the rest of the UK where prices have risen, particularly in the Midlands.

This rise in prices can be attributed to demand outstripping supply, with a record low number of properties on the market (reported in December 2015). In addition, the Bank of England’s cut in interest rates has helped to boost confidence in both buyers and sellers. Although borrowing costs are low, there is still some uncertainty on the effect that Brexit will have on the housing market and economy in the UK.

In August this year the number of property enquiries fell, which isn’t unusual given that the market tends to take a dip in this month more than any other.

The decline in the number of people buying property can also be attributed to the fall in buy-to-let investors following the stamp duty rise for property investors.

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

If you would like more information on how Brexit may affect you, please contact Derngate Wealth today.

https://www.theguardian.com/money/2016/sep/08/confidence-housing-market-house-prices-rising-brexit-vote-rics-surveyors