With Rishi Sunak warning about the risk of inflation in the Spring Budget, many homeowners will have begun to consider what it will mean for their mortgage payments when interest rates increase. If your agency offers independent mortgage advice, the next few months are a perfect time to reach out to homeowners who you know are likely coming to the end of their fixed terms.
Lowest interest rate on record
When the Bank of England made two emergency interest rate cuts in March 2020 to help ease the impact of Coronavirus, the base rate dropped to the lowest interest rate on record. Although this was intended as a temporary measure, the Bank of England announced this month (on 18th March 2021) that it would hold the base rate at 0.1% until their next Monetary Policy Committee meeting on 6th May.
Good time to act
Historically, the most attractive mortgage deals have disappeared as soon as there is any sign that the Bank of England may raise interest rates. As restrictions start to ease and the economy begins to recover, it’s a good opportunity for you to reach out to contacts on your database with information that could help them switch mortgage lender to reduce costs and fix their interest rate for a further period. It’s also something that would likely motivate first time buyers, encouraging them to jump onto the property ladders whilst they can still secure great mortgage deals.
Locking in a good deal
Last year, 1.5 million people carried out a remortgage, according to the trade body UK Finance. At present, the average rate on a two-year fixed mortgage is currently 2.57%, up 0.14% from last year, while a five-year fixed has risen by 0.01% to reach 2.75% (Moneyfacts March 2021). With the Roadmap out of Coronavirus currently on track and businesses starting to reopen, there is no certainty over how long the rates will remain this low. For many homeowners, as insecurity in the employment market continues, locking in a deal now should avoid them being stranded should their existing fixed-term end and their ability to secure a new deal be impacted by their employment status.
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