In recent weeks, the base interest rate was increased for the first time since July 2017. Effectively, returning to the rate of 0.5% is just the reversal of the decision in August of last year to drop rates to the historic low of 0.25%. For most with mortgages, this will not have an immediate or significant impact, as lenders have made small adjustments ahead of this announcement.
What this could signal is the end of this spell of such low interest rates, with Carney saying that there may be, over the course of the next few years, two similar rate increases. The key issue here is really mortgage affordability, and how interest rate changes could have an effect. “Stress-testing” of those applying for a mortgage has been beefed up since June of 2017. Lenders are asked to test borrower's ability to cope with increases in interest rates of 3% the rate that will apply after the introductory offer; which in reality means testing of rates between 5-7%.
Over the medium term, Brexit is going to make a difference to the UK economy, and probably in ways that have not yet been predicted.
In the short term, interest rates are still very low, and it's a good idea to take advantage of these low mortgage offers that will gradually be replaced by less competitive products. Of course, now is a crucial time to utilise a fixed rate mortgage, and as good a time as any to check your own personal mortgage details and assess your situation.
Also, it is certainly worth noting that mortgage costs as a percentage of average wages are now lower than in 2007. Buying is clearly a sensible move, and the stability offered by owning your own home cannot be matched by any rental arrangement.
Get in touch, we'll be delighted to discuss what you're looking for in a home, and have firm associations with independent financial advisers who will be able to discuss the recent updates and we'll help every step of the way with the best way to buy your home!