Mortgage Interest Rates Already Raised By Lenders
Leading experts at national law firm Irwin Mitchell Private Wealth are warning that the housing market could see fluctuations following a potential base interest rate rise, putting households and the wider UK housing market at risk.
Over 20 mortgage lenders have now raised their interest rates, prompting a flurry of activity in the sector as borrowers are looking for fixed-rate mortgages or re-mortgages in order to beat the hikes.
The rise in mortgage interest rates from multiple lenders has now been followed by the news that the GDP grew by 0.4 per cent during the months of June to September, surpassing its forecast of 0.3 per cent which was predicted by experts. The news adds credence to the suggestion that the base interest rate will be rising this week, though the move may create fractures in the UK economy.
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Residential property experts at Irwin Mitchell Private Wealth are concerned that a base interest rate hike will stress the housing market. A recent survey published by bank and mortgage lender Halifax found that confidence in the UK housing market was at a five-year low, with one in five adults predicting that house prices will fall in the next year – an indication that the public is beginning to lose faith in high house prices. A base interest rate rise might further exacerbate borrowers’ ability to keep up with their mortgage repayments – particularly as wage increases have failed to rise above inflation in recent years.
Helen Hutchison, a Senior Associate in the firm’s Sheffield Residential Property team, commented: “It seems the major mortgage lenders are expecting the base rate to rise in November, given the sudden change in their own interest rates and the GDP result. This was inevitable given that the interest rates have been at a record low for years and both lenders and the Bank of England will have been preparing when, not if, the interest rates rose.
“The concern is that any sudden spike in interest rates will cause the housing market to fluctuate, with house prices going up even further with the interest rate change having a knock-on effect withthe commercial property market and potentially for overseas buyers looking to invest in the UK through residential property. The added uncertainty of what Brexit will bring for the UK economy only adds to the confusion.
“Any potential increase in the base interest rate will be the first for a decade. There are now many who now hold mortgages that have never experienced an interest rate increase, and so should seek advice from a professional if they believe they are going to struggle to afford their mortgage repayments.”