Are you ready for the expected rate rise?

In good news for property owners. Nationwide’s House Price Index has revealed that house prices rose again in April.  Does that mean there is now an expected rate rise in the works?

April saw a total of 50,000 residential house purchases, made up of home movers and first-time buyers. This is the highest figure for over 11 years, representing the biggest rise since the recession hit.

Experts have suggested that house prices are expected to rise by around 1% over the course of 2018.  This is despite there being fewer Buy-To-Let purchases since 2016 following tax changes and a change in Buy-To-Let underwriting standards.

Activity in the market

That’s not to say that there’s a lack of activity in the market. Despite an 8.8% downturn of completed Buy-To-Let purchases compared to last year, many landlords are beginning to understand the benefits of expanding their property portfolio using a Limited Company set up for the sole purpose of letting property.

This, in turn, has seen many landlords coming back to the market after a short period of inactivity.

As UK Finance director of mortgages Jackie Bennett put it,

the Buy-To-Let market continues to operate at stable but subdued levels

which definitely reflects an accurate representation to me.

UK Finance director of mortgages Jackie Bennett - Expected rate rise?
UK Finance director of mortgages Jackie Bennett

Business mix

I like to look at the mix of business that I write.  This is why I am happy to write above about my experience with landlords and Buy-To-Let mortgages recently.

Reviewing my business also includes details of the types of mortgages that I recommend. The mortgages that I have written in the past few months have seen a heavy concentration of fixed rate mortgages.

Giving advice to customers based on their needs and goals means that I hear first-hand what concerns borrowers have. The preference for fixed rates recently seems to be driven by the prospect of the Bank of England raising the base rate.

Fixed rate or variable rate?

The potential saving offered by a variable rate mortgage is seemingly offset by the preference for some stability in mortgage repayments.  With economists widely reporting that a rate rise could come as early as May, homeowners are locking down their rates quickly.

As an interesting side-note, don’t forget that if you are tied in to a fixed-rate mortgage you are able to renegotiate a rate up to six months before your existing deal expires!

Because of this, I have already successfully helped customers fix low rates on their remortgages where they are tied in until October this year.

This gives peace of mind to customers and prevents them from going on to (in most cases) a higher rate. Also, it gives protection against any rate rises between now and October.

Are you prepared for the expected rate rise? When was the last time you reviewed YOUR mortgage?

If you think I may be able to help, call me for free mortgage advice.

Dan the Mortgage Man

07837 820 894

Expected bank of england rate rise