Mortgages: Expert advises public amidst rising base rates
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Despite the predicted hike, it’s important for those with mortgages to realise that the rates are still the lowest they have been for 25 years, and people should be taking advantage. There is “great opportunity” for those with mortgages on variable rates to still switch to a fixed deal before all the deals have been pulled away from lenders.
Express.co.uk spoke exclusively with Sarah Thompson, Managing Director, Financial Services at Mortgage Scout about the current interest rates and the impact on mortgages.
She said: “Whilst it’s speculated that interest rates may rise, we need to remember that they’re still the lowest they’ve been for 25 years.
“The current base rate remains at 0.1 percent, which is a surprise to many – this offers a great opportunity for those who had not yet managed to relook at their mortgage deals or fix their variable rates.
“Also, many people don’t realise they can start looking at their mortgage deal up to six months before it runs out.
“Of course, it’s always worth remembering that the higher the deposit, the lower the interest rate.”
If someone’s mortgage deal is coming to an end soon, they may wish to start looking around for a new deal as soon as possible.
This will give people a chance to take advantage of today’s low rates, and save money for something more worthwhile.
Even those without a house, looking to secure a mortgage can take advantage of the current situation at hand.
Ms Thompson gave her advice for those looking to get on the property ladder in such uncertain times.
She said: “Rising interest rates might seem a daunting prospect for first-time buyers, particularly with house prices rising and it already being so tough to save for a deposit, but the current rates – in actuality – remain at a reasonable level.
“It may seem obvious, but you need to be regimented and look at your budgets on a monthly basis, making cutbacks where necessary. Everyone aspires to own their own home one day, and making sacrifices is part of the process of saving for a deposit.”
She explained that those looking to get a mortgage need to do their research and keep in like with statistics from the Office of National Statistics ONS when looking at their budget, and how much they will potentially need for a deposit.
She continued: “Often, banks and buildings use stats from the ONS when looking at budgets, so first-time buyers should ensure their own are more or less in line with that of the ONS.
“They should also do their due diligence to ensure their credit scores are in order since, right now, lenders are lending in a more socially responsible way, to ensure people can afford their mortgages even if interest rates do go up.
“It’s becoming more and more commonplace for ‘the Bank of Mum and Dad’ to remortgage their properties in order to help out with their children’s deposits, or at the least match their deposits.
“With the current interest rates being relatively cheap, it’s very affordable to remortgage right now – that is, for those both willing and able.
“For parents wanting to help their kids get onto the property ladder but without a tonne of cash savings, there’s always the option of equity release.”
Britons should always speak to a mortgage broker if they are unsure about what to do and discuss their specific situations with a professional.
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