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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.