In recent months, home buyers and landlords have been lucky enough to benefit from historically low interest rates. Banks and lenders have been queuing up to offer some extremely attractive deals to mortgage hunters with interest rates on some schemes falling as low as 1%. However, the warning signs are feeding their way out the press, with indicators from the Bank of England and certain specialists within the financial sector that an interest rate rise is more likely than not, on its way.
With changes seemingly inevitable, how can you prepare for an interest rate rise and ensure you are ready for any financial impact?
Reviewing Your Outgoings
An interest rise brings with it an inevitable rise in your borrowing costs, so a key preparation is a full review of your monthly outgoings. Some of us have unnecessary, or luxury payments being made each month, on mobile phone contracts, subscriptions and other expensive commodities. If you are fearful of the cost of the potential interest rate rise, then reviewing these can be a responsible way to approach it.
Switch to Fixed Rates
If the opportunity to switch to a fixed rate presents itself, then now could be the time to consider it. The favourable interest rates that are currently circuiting are unlikely to be replicated in the near future, so it makes sense that if a higher interest rate is fearful to you, fixing could be a sensible solution.
Reschedule Unsecured Loans
Importantly, unsecured loans such as credit cards can become a real worry with a change in interest rates. Homeowners need to consider when they can pay these off without being affected by the rises in interest rates.
The Experts View
It seems that the impending base rate rise has been looming for many months but yet we have no clear defined time line of when it is going to happen. The Bank of England would like to raise interest rates, as with the continued level of 0.5% it gives little scope for them to make any small adjustments when needed. Let’s be honest, it is unlikely that they will go down as any drop in base rate is going to have minimal impact when already at 0.5%. As time passes us by the inevitable that rates will rise grows ever closer, and indeed the view of early 2016 could well be the beginnings of this change however, with many external factors contributing to our overall economic picture it still remains a guessing game of when.
To discuss any of your mortgage needs, get in contact with the Mortgage Centres team today.