Money Matters: Craig Poulter: Good things always come to an end
As predicted by many the Bank of England’s Base Rate increased to 0.5% last week but what does this mean to you and me?
Well, the most obvious is for anyone on a Base rate tracker, they will see a modest increase on their monthly payment immediately. It’s not a dramatic increase unless you have a particularly large mortgage. Also, many lenders have a Standard Variable Rate (the rate you would generally go onto after your initial benefit period i.e 2 year fixed rate) which is directly linked the Bank of England Base Rate.
I’ve heard some people proclaim this is the start of high interest rates in the not too distant future, granted a couple of these were ‘Savers’ hoping rather than truly believing. The Governor of the Bank of England, Mr Mark Carney, even said himself the rate increases will be small and not regular and that we shouldn’t expect pre 2008 rates any time soon.
As an industry we have noticed a change in customers’ ‘attitude to risk’ in recent months and by that I mean many more 5 and 10 year fixed rate mortgage products have been chosen over the cheaper short term deals, such as the 2 year fixed rates which offer a more attractive interest rate.
Offering trackers without the early repayment charge as an incentive
If you are on a Base Rate tracker and concerned by the rate rise, check your mortgage offer. Section 10 usually informs you about any “early repayment charge” you have for coming out of your product. Some lenders for the last couple of years have been offering trackers without the early repayment charge as an incentive for borrowers to take a tracker deal. Santander and Nationwide are just two of the lenders to have done this. This means you could leave your current deal and change to a product you feel more comfortable with. And please don’t forget that if you are on a lenders standard variable speak to a qualified and reputable mortgage adviser sooner rather than later, the chances are you a paying way over the odds.
If you have any questions about how the Base Rate change will affect you and not sure which way to turn, feel free to give us a call at Venture Mortgage Management for a no obligation discussion.
Craig Poulter Certs CII (MP &ER)
www.venturemm.co.uk
01323 894532
