How Interest Rate Rise May Affect Your Mortgage | Fraser & Co

The Interest Rate Rise: what this could mean for your mortgage

Last Thursday, the Bank of England announced an interest rate rise of 0.75%, to 3%, which is 10.1 % higher than the Government’s 2% target. This is the highest they’ve been since 2008, and the three-quarter percent rise is the biggest single increase in more than 30 years. 

''The era of historically low-interest rates looks to be over, which is making it more challenging for new first-time buyers stretching themselves financially to try and get out of the frenzied rental market and onto the housing ladder” 
Tim Bannister 

How hard would this be to get a mortgage?

There’s now more stability in the financial. So we’ve seen an increase in the number of mortgage deals available recently, and the cost of fixed-price deals has started to decrease. 
The majority of the deals mortgage lenders are currently offering have already factored in an interest rate rise of 0.75%, because it was expected. So it’s unlikely that today’s rise will lead to an increase in the pricing of mortgages.
That said, lenders have tightened their affordability criteria over recent weeks. This is to ensure people are still able to afford their mortgages, where their payments increase. 

What could the interest rate rise mean for your mortgage?

If you’re on a tracker rate mortgage, you’ll likely see your monthly repayments rise shortly. The reason being - the repaid amount is usually set according to the current interest rate, plus a set percentage.
If you’re on a fixed-rate deal, the interest you pay is set until the end of your term. 
When your fixed-rate deal comes to an end you’ll automatically be switched to a Standard Variable Rate unless you lock in a new fixed deal.
As most of the mini-budget announcements have now been retracted, we’ve seen mortgage rates fall in the last couple of weeks. 

Based on the latest Rightmove data we notice there’s still a strong desire to come to market.
New listings in October 2022 were up 13% versus October 2021, although down slightly (-1%) on the more comparable October 2019.

Pricing your properties at a realistic price is very important when coming to a fast agreement. 
The average asking price for October 2022 was 8% higher than October 2021. However, we're starting to see the gap between the asking price and final sold price widen and UK house prices dropping. 

Here at Fraser & Co, we have the experience and knowhow to help you get the most from your property by selling in the right way. You can find out more about what we offer here. 
You can also find out how much your property could be worth on the current market by checking out our free and instant online valuation tool. Please bear in mind that this data is automatically generated. If you would like to have an in-depth, personalised valuation with one of our property experts, please don't hesitate to contact us on +44 (0)20 7723 1284 or pop into our local Fraser & Co office for a friendly chat.

Source

Rightmove Interest Rate Rise, November 3, 2022

Property Industry Eye UK House Prices, Marc Da Silva, November 8, 2022