Falmouth Packet Business Mar ’18 – To fix or not to fix?

To fix or not to fix?

The decision to fix your mortgage or not will depend upon your individual position. An important factor being whether you could afford to pay increased mortgage payments should interest rates rise.

With Mortgage borrowers benefitting from almost 10 years of the lowest rates ever, many mortgage holders will not have experienced a change in interest rates.

So, what’s fuelling speculation of rising interest rates- quite simply inflationary pressures. The Consumer Price Index was at 3% in February and did not change from the month before and was anticipated to see a fall. This figure being significantly higher than the bank of England target of 2% set by the government, excessive inflation is damaging to an economy and could lead to recession if not controlled effectively. A softer approach to rate rises may be considered dependent upon the impact if any to the UK economy as we head further down the path of Brexit negotiations.

However a straightforward warning from economists has indicated the likelihood of multiple increases in interest rates during 2018 which could see today’s 0.5pc rate double or more within months. An increase of one per cent on a mortgage of £150,000 would mean an increase in the interest you pay by a further £125 per month.

Any increases to the base rate will filter through to borrowers and it is clear we should be expecting to pay more. With most individuals largest financial commitment being their mortgage, maybe now is the time to consider your mortgage arrangements and speak with an independent mortgage broker. Not only could you avoid paying more but you may well save money on the amount that you are currently paying.

This article does not provide individual financial advice and are the views of the columnist only. Vision Independent Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority.

Sarah Williams of W.T Independent Financial Planning is an Appointed Representative of Vision Independent Financial Planning Ltd

Article March 2018