Nationwide have announced this week that they have cut rates on some fixed rate mortgages by up to 0.50% and some tracker rates by up to 0.70% whilst other lenders have been busy amending their own product ranges. This amount of activity from so many lenders has many believing an increase in the Bank of England base rate is more likely than at any time since the rate was dropped to its previous all-time low of 0.50%. This of course adds more fuel to the fire that an increase in interest rates is due this week.
An upwards move to the interest rate on Thursday would draw to a close the longest period in living memory without an interest rate rise, with the last in July 2007, when rates increased to 5.75%.
By announcing early Nationwide could be looking to capitalise on homeowners who may be worried about what a potential rise will mean to their monthly payments (this will probably be only a marginal increase). Of course, remortgaging now is one way of avoiding the hike. Nationwide may be trying to create an air of panic to get homeowners to rush into a decision to remortgage. It’s important to note that interest rates will continue to remain low, and a decision shouldn’t be rushed into.
The advice from our mortgage advisor, Mitchell Mann is for anyone within 3 months of their existing deals ending or those currently on variable rates after their initial mortgage deal has expired would be to get in contact for a mortgage review as it may be possible to secure a new deal now before any change in interest rates.
Interest Rate Hike Will Have No Impact on the Average UK Homeowner
UK homeowners have enjoyed record low-interest rates since they were slashed to 0.5% in 2009 and then further squeezed to 0.25% after the EU Referendum. But with the economy outperforming wider predictions, it is highly likely that this Thursday interest rates will once again increase.
Leading online estate agent, eMoov.co.uk, has highlighted that if rates do increase, UK homeowners have little to worry about as the result is unlikely to impact them financially.
Founder and CEO of eMoov.co.uk, Russell Quirk, commented:
“If interest rates do increase this week, it is likely to be marginal, to say the least, and probably no higher than a return to 0.5% which is actually the norm.
This slight hike is designed to counter the rising level of inflation and will increase the monthly cost of some mortgages, in particular, variable rate loans and tracker deals.
But any increase in monthly payments, like interest rates themselves, will be marginal and manageable for those impacted. On the typical £150,000 loan homeowners will be out of pocket around £15 to £30 a month, certainly no grounds to shout, 'financial meltdown'.
House price growth and the market’s overall stability have been incredibly resilient despite the EU vote and a snap general election. A few quid added to the average mortgage repayment will not deter this growth in the medium to long-term.”