ANOTHER RATE RISE

In an attempt to hold back the highest rate of inflation in decades, the Bank of England has introduced eight consecutive interest rate rises in the past eleven months, lifting the guideline Base Rate from 0.1% last December to 3% on the 3rd of November this year. This most recent increase in Base Rate, is unlikely to be the last, with forecasts suggesting that the rate will have to rise further next year, possibly up to 4.5%. Thankfully that peak is lower than predictions had suggested a few weeks ago, post the turmoil the Government’s mini budget caused.

In what was the most eagerly anticipated Monetary Policy meeting in years, the Bank have had to ‘’fly blind’’ to a certain extent, as the UK Government announced that its Autumn statement or ‘Budget Day’ would not be until 17th November.

FURTHER RISES EXPECTED

Immediately after the announcement, the chancellor Jeremy Hunt said ‘’The most important thing the British Government can do now is to restore stability, sort out our public finances, and get debt falling, so that interest rate rises are kept as low as possible’’

MEDIA COMMENT

Media comment on the detrimental impact on the population’s finances has been alarming, although many of the measures being introduced in the UK will not affect the Channel Islands for which we should all be thankful.

IMPACT ON THE LOCAL MARKET

While it is inevitable that the recent increase in interest rates and tightening of lenders’ criteria will impact on the local mortgage and therefore property market, it remains true that life has to go on.

The experience of past recessions and the eye wateringly high interest rates from the early 1990’s, when 15% was the norm, shows that the vast majority of people survive and indeed it is often these people who are now benefitting from large levels of equity in their homes, having worked hard to purchase during that time.

History has shown that property will continue to be bought and sold, as first-time buyers wish to enter the property market as soon as they can, avoiding ongoing rents, preferring to pay off their own mortgages and changes in personal circumstances can trigger the need for existing owners to secure a bigger, or smaller, home.

CONSIDER A REMORTGAGE

With existing homeowners who choose to stay put being wise to consider re-mortgage options rather than simply selecting from the default rates of interest their current lenders can offer, when their existing fixed rates expire.

The challenge may be finding a lender who not only offers a competitive interest rate, but also the level of borrowing required, whilst meeting their new, stricter underwriting criteria.

Having weathered the many financial storms over the past 33 years, The Mortgage Shop is available to help our existing, and new clients, to secure the best mortgage for them, offering impartial and independent advice on what the market has to offer.

Here are a few of the best rates available at the time of writing (these will have changed by the date of publication)

Tracker – 2 years  –  3.19%

Fixed – 2 years – 60% - 5.80%

Fixed – 2 years – 90% - 6.09%

Fixed – 5 years – 60% - 5.59%

Fixed – 5 years – 90%  - 5.69%

Rates correct at 03/11/2022