With speculation increasing that interest rates will rise earlier than anticipated, borrowers may wish to protect themselves from a rise in their mortgage interest rate now by fixing their mortgage payments, advises Stockport based Vernon Building Society.
In August 2013, the Bank of England said that it would not consider raising interest rates from their record low of 0.5% until the unemployment rate fell below 7%, something that it predicted would happen in 2016. However, according to the Office for Budget Responsibility (OBR) this may now happen much earlier, possibly as early as the final quarter of 2014, which could well lead to a rise in the Bank of England Base Rate.
With increased confidence in the economy and housing market also having an impact on interest rates and leading the government to redirect its £80billion Funding for Lending Scheme towards business lending rather than residential lending, a rate rise looks more likely to be on the cards in the next 12 months than ever before.
Head of Sales and Marketing at Vernon Building Society, Ian Keeling said:
“The rates on new fixed rate mortgages tend to anticipate changes to the Base Rate and there are already signs that they are starting to rise. It would make sense for anyone vulnerable to an interest rate rise to consider fixing their mortgage now whilst there are still relatively low rates available.”
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