You may have heard that the Bank of England are considering the possibility of an interest rate rise in November. As a result, we’ve had a number of clients ask us what this means and how it may affect them. So, we’ve put together this short guide, which we hope, will answer many of your questions.
Of course, your broker will be happy to discuss this further with you, should you have any concerns about the impact on your mortgage.
The lead up to November’s interest rate vote
The Bank of England Governor, Mark Carney has hinted a number of times in the last few weeks that interest rates
are likely to rise soon, which has led to speculation of a November hike.
His comments to BBC Radio 4’s Today programme, which followed a more conservative tone at the last Monetary
Policy Committee meeting, have added fuel to the fire, suggesting that Mark Carney could switch his voting intentions to an interest rate rise.
Things aren’t quite as clear cut as they seem, however. In contradiction to Mark Carney’s comments, his Deputy, Sir
Jon Cunliffe in an interview with the BBC said most of the inflation the economy is currently experiencing is down to
the fall in the pound, and suggested without “sustained signs of domestic inflation pressure”, the case for a rate hike in November was weak.
The overall feeling is that if the Bank of England raise the base Rate in November by 0.25% to 0.5% that may be it for a while.
How have lenders reacted?
Despite the a lack of real certainty, many lenders have started to increase their Fixed Rate mortgage deals by 0.1
to 0.2 basis points on the back of expectations that there will be an interest rate increase.
What does that mean for you?
If your current fixed rate deal is coming to an end, or you are on a standard variable rate or tracker mortgage, the
likelihood is that your mortgage payments will increase, should interest rates rise next month.
What should you do?
If you are currently on a variable rate or tracker mortgage, or indeed, your fixed rate mortgage is coming to an end, we would urge you to get in touch with your City Mortgage Solutions broker who will be able to review your existing deal and find a suitable replacement where available.