The recent news and forecasts coming from the banks and the treasury suggest that we are about to see the end of the very low cost of borrowing. Already this week HSBC, NatWest and Barclays have raised their rates on fixed-rate deals following similar moves by Halifax, Nationwide and Santander.
And markets are betting on the Bank of England will begin raising interest rates, possibly before Christmas and perhaps by as much as 1.25% by the end of next year.
Buried in a report published by the Office for Budget Responsibility (OBR) was their figures for predicted year-on-year growth in mortgage interest payments – included in one of the main report’s supplementary tables – suggest homeowners need to be braced for a 5.6% increase in costs next year, rising to 13% in 2023 before falling back to 5.4% in 2024.
Laura Suter, head of personal finance at investment firm AJ Bell said “Someone with £250,000 of borrowing who fixed earlier this year and renewed in 2023 would see £600 a year added to their mortgage costs, while someone with £450,000 of borrowing would see their costs hike by £1,068 a year.”
Of course a forecast is only that and we’ll have to see what actually pans out as there are always a number of alternative scenarios as the graph below shows. Let’s hope for the Central forecast!
Whatever the likely rise, it will certainly curtail the buoyant property market and call a halt to the surging house prices throughout the UK.
All the more reason to speak to an independent mortgage advisor who can look at the whole of market which includes specialist lenders.
Ali Mitchell, director and senior mortgage adviser at RobMac said “There is definitely a change taking place in the borrowing market right now and home-owners should be prepared to pay more in the next few years. That said, as an independent adviser, we can still help ferret out the best deals that are available because we can access the whole of the market and not just what is available from the main banks.”
If any of the above is of interest to you and you would like to discuss your mortgage further, you can arrange to meet online with one of our financial advisers by scheduling an online meeting here >>
