To say that we are going through a topsy turvy financial time is probably an understatement.
We know many of our clients are feeling nervous about how the volatility in the markets, and how the rapidly increasing interest rates will affect them. I don’t have a crystal ball to say what will happen and when, but I would like to try and provide some reassurance and explain what is happening in the mortgage market.
Unfortunately, based on various calls we have received, it has been perceived from the media coverage that lenders have stopped lending.
This is not the case. Lenders are still lending; but interest rates have increased, with fixed rates being most affected. Interest rates have been rising since December 2021 when the Bank of England started to address inflation. The “mini budget” has resulted in an acceleration of this.
Be assured that we still have access to a wide range of fixed and variable rates and as whole of market advisers, we are not restricted to a limited panel of lenders.
We will continue to be proactive to support you and have made a note to contact you 6-9 months before your mortgage is due to end and we will advise you of the best options. However, we are being asked “what can I do if my fixed rate is not due to end soon”? Whilst you are paying a lower rate of interest, there is an option with most fixed rate mortgages to overpay up to 10% of the outstanding balance per year. If this is a possibility for you, in full or partially, it will have a few positive effects:
- You will reduce your balance and pay less interest.
- Lower loan-to-value mortgages can attract lower interest rates as they are seen to be a lower risk.
- It will help you to adjust to a new household budget, making it easier to accommodate the potential future higher rates.
These are general comments, if you require specific personal advice or still have doubts, please do not hesitate to contact me.