The recent news around interest rates and mortgage offers has been scary and confusing to many, so we've boiled down what happened, why it happened and what happens next...
What happened?
The pound sank against the dollar following comments from the Chancellor suggesting that more tax cuts are coming. This means that the government would need to borrow more, which spooked financial markets.
In response to that, the Bank of England said it “would not hesitate” to hike interest rates. The BoE determines the ‘base’ rate of interest, which is currently at 2.25%, and used by banks to determine how much interest is paid on savings, or charged on mortgages. Banks adjust their rates as the base rate rises and falls.
What it means
The BoE is expected to increase rates substantially over the coming year, and that’s making it difficult for many lenders to price mortgages.
This prompted some lenders to withdraw some or all new mortgage offers.
What happens now?
If you already have a deal agreed with your lender, it’s likely to still go ahead as planned but if you have any concerns or questions just check in with your bank or broker for reassurance.
If you want to buy, remortgage or re-fix soon, you may want to wait until the dust settles, but do keep in mind that mortgage rates could be much higher by then.
If you want to buy, remortgage or re-fix next year, the consensus is that base rates will be higher by around 4-6% then. Think about what’s affordable for you, and if you can, ask a broker for advice on what could be best for your circumstances.
If you have any questions or concerns, our team are here to help guided you, so please don't hesitate to get in touch.
Posted on: 30 September 2022
