Thursday November 9, 2017
Last week the Bank of England’s policymakers decided to increase interest rates by 0.25% to 0.50% and although it was a small increase, it is still significant as it is the first time in over a decade that interest rates have risen.
Many of our mortgage clients are on fixed rates so are unaffected in the short term but this will affect those whose products are currently on base rate trackers or discounted variable rate products.
A by-product of the rate rise is that it has started to affect the Buy to Let stress calculations which lenders use to determine how much they will allow landlords to borrow. Based upon a rental income of £975pm, some banks would lend approximately £8,000 less than they would have done this time last week!
Looking ahead, the EY ITEM Club (a non-governmental forecast group) have urged the MPC to “sit tight” after the initial increase to gauge the response of businesses and consumers which we think makes sense.
If your mortgage is currently on a variable, discounted or tracker rate, we would encourage you to talk to one of our Advisers so that we can help you understand how the interest rate rise will affect your monthly expenditure and discuss the options available to you.