The Governor of the Bank of England, Mark Carney, has suggested that interest rates could rise by 0.25% before the end of this year. Although we have heard this before and the interest rates didn’t actually rise it is still a possibility. What does that mean for you, the homeowner, if you were thinking of selling in the next two to three years? The interest rate rise could ultimately affect the price of property. The reason, I believe, behind this thinking is because the higher the interest rate the higher the monthly mortgage repayments will be which in turn means buyers will be able to borrow less. This will affect first time buyers and the high end of the market, in particular.
According to the Bank of England, 44% of homeowners are on fixed rate deals, so will not be affected by any immediate rise in rates. Currently 90% of new homeowners are on fixed deals, and they tend to have the largest loans. However, depending on when their two or five year term finishes, borrowers will inevitably face higher repayments eventually.
Most homeowners – 56% – are on a Single Variable Rate or a tracker mortgage, so will, in theory, be affected by a rate rise.
Experts think it unlikely that existing fixed rates will be withdrawn quickly. But they are unlikely to go any lower. So anyone on a variable or tracker rate may wish to switch to a fixed rate deal.
With this in mind my advice to anyone considering a move in the short term should seriously consider bringing it forward before this rise comes into force.
Please do call me on 01923 285886 for free advice and to discuss your options.