What should home owners do about disappearing mortgage products?
The Bank of England’s Monetary Policy Committee announcement yesterday that interest rates would be going up by 0.25% to 0.5% caused ripples in the mortgage market. The effect was felt even before the announcement was made. Due to a growing economy along with rising inflation the expectation that the interest rate would go up had already been established before the MPC had cast their votes, and few were surprised when the Bank of England had set the rate rise as public policy.
Lenders were already preparing for the news since October. According to The Telegraph a whopping half of all mortgage lenders have adjusted their suite of mortgage products even before the announcement was made – removing at minimum one of their more attractive deals for borrowers from their offerings. The last ten years of the mortgage-lending market has been as dynamic as the property boom during the same period. And this will likely shake at least 2.6 million first time buyer mortgage customers’ confidence, particularly those that are not on fixed rate mortgages. Those that are on fixed rate mortgages could find that once their terms end, they will be stuck with a difficult mortgage interest rate situation to deal with, especially considering that City expectations are that the we will be faced with annual interest rate rises until the end of the decade. The timing of the interest rate-rise, along with stagnant wage increases, the uncertainty around Brexit and climbing inflation all are factors that mortgage borrowers should be aware and prepared for.
It goes without saying that this recent small - but historic - rise will change things for mortgage owners. Given that lenders are one step ahead of the incoming changes, mortgage customers should be too for their own sake. Our advice would be to talk to your FCA-accredited mortgage broker and find out what the best deals out there are for you right now.