People in the UK are now feeling the strain of ever-increasing living costs. Interest rates have been rising sharply because of soaring inflation. This has resulted in higher mortgage rates straining millions of homeowners’ monthly budgets.
In this guide, we’ll take a look at the current mortgage market’s trends and predictions. You might be thinking if you should be fixing your current mortgage rate. For property tax advice in London, visit IBISS & CO.
Interest Rates in the UK
The Bank of England had increased the interest rates for the seventh time since Dec 2021, when the interest rate was at 0.1 per cent. Currently, the function is at 2%, and the interest rate is at 2.25%. In two years, this number can reach 4.09 per cent, which will be the highest the interest rate has been in eight years.
In the upcoming months, experts predict further rises and the rates hitting 5 per cent next year. The Bank might increase the interest rate once again in November 2022. Many mortgages in the country are linked with the interest rate. The minute the interest rates rise, the mortgage rates mirror them. The fixed-rate contracts already have the rising interest rates factored into them.
However, it’s not just the country’s climbing rates that pose an issue. Current or potential homeowners, who want to buy or move into a new home, are dealing with asking prices that are more than 10.5 per cent of what they were a year ago.
Even though the government will cut down on the stamp duty rates, which might bring a little comfort to the housebuyers who are worried about affordability, the rising interest rates are still a huge obstacle.
Fixed-Rate Mortgages
Many homeowners are going for long-term, fixed-rate mortgage deals. This is their attempt to ensure some stability when it comes to managing home finances. However, this has alerted mortgage brokers.
While borrowers have had to pay more when they want to fix the mortgage rate in the long term, this price gap has been closing, and fixed-rate mortgages have become worth exploring. These long-term deals are highly competitive right now.
Mortgage Rates in the Next 5 Years
If the interest rates rise, so will the mortgage rates. The prediction for an average 5-year increase in fixed mortgage rates is 0.3 per cent in 2022, 1 per cent in 2023, and 2 per cent in 2024.
Inflation might drop in the future, and borrowers would have to deal with higher repayments if they want to renew their loans. However, this will relieve homeowners struggling to meet their mortgage payments. Some lenders might even offer low rates on new mortgage deals.
If you’re looking for business or tax advice regarding mortgage payments and property tax in London, visit us at IBISS & CO. today. Our chartered tax advisers and accountants can help you with property tax advice.
Reach out to us today.
