This week we thought we would address the subject of mortgages and the small increase in the interest rate. It follows on from a video chat we had with Paul Brett-Smith from PBS Financial Advisors. In simple terms, mortgage rates are still VERY LOW!
Since the start of 2022 interest rates have risen by 0.5%, however for those looking to purchase a home many mortgage rates remain attractive, including those for first-time buyers who have a better choice of mortgages now than they did pre the pandemic.
It is estimated over 1 in 4 households are on mortgage deals affected by changing interest rates (UK Finance), but the average 2-year variable rate published by the Bank of England is actually lower than a year ago.
At 3.99% the revert-to-rate is only 0.37% higher year-on-year. For those with a 25% deposit, the current 10-year fixed rate is just 0.33% above the 2-year fixed rate. There are some appealing options for those looking at longer-term options!
Back in 2008 when the base rate was last 0.75% and in 2014 when affordability tests were introduced, rates were far higher.
The next meeting of the Banks Monetary Policy Committee is on Thursday 5th May.
Source: Dataloft, Bank of England, For general information only. Specialist advice on investments must always be sought. If you would like to talk this through – call the team at PBS Financial Advisors in Lancaster on 01524 843322, I’m sure they can help!
Thanks for reading
Michelle