Whether you are a first-time home buyer or a homeowner looking to remortgage, you may want to lock in fixed-rate mortgage transactions before the Bank of England Monetary Policy Committee (MPC) meeting on November 4, 2021. Why? Because the Bank of England’s benchmark interest rate is likely to rise as a result.
Will this cause mortgage lenders to raise interest rates? What does a mortgage broker recommend? Let us find out.
What is the interest rate forecast for the fourth quarter of 2021?
The UK National Bureau of Statistics’ 12-month inflation statistics through August 2021 indicate that inflation is rising.However, the latest version shows Increase of 2.9% in the 12 months to September 2021, Down from 3.0% in the 12 months ending in August.
Despite the slight decline, experts believe that it will further rise to 3.2% in the short term, and eventually to 4%. These further increases are expected to be reflected in subsequent ONS inflation statistics.
In addition, Bank of England Governor Andrew Bailey admitted that the energy crisis and the upcoming Christmas celebrations will push inflation to higher levels. This means that the Bank of England is very likely to raise the benchmark interest rate during the next Monetary Policy Committee meeting on November 4, 2021.
In fact, after analyzing the market, investment experts believe that the probability of interest rate surges is at least 80%, and the probability of benchmark interest rates rising is at least 55%.
Will mortgage lenders raise interest rates?
Mortgage lending institutions have been weakening each other, and the lowest mortgage interest rate currently available is 0.79%. If the Bank of England raises the base interest rate next month, these concessions may no longer be available.
If you want to apply for a mortgage and your financial situation allows it, now may be a good time to take the risk before the mortgage interest rate rises.
It’s simple: if inflation continues to soar, the Bank of England will step in and raise the benchmark interest rate. In turn, this will make interbank loans more expensive, and lenders will raise mortgage interest rates.
By November, some mortgage lending institutions are likely to start announcing increases in mortgage interest rates.
What does a mortgage broker recommend?
First of all, remember that we all have personal circumstances that make us unique. It may be a good deal for one person, but it may not be ideal for another person. Therefore, it is your responsibility to evaluate your financial situation to determine whether you can easily afford a mortgage.
Second, find out whether you can afford a low-interest fixed-rate mortgage transaction. You will notice that these transactions start with a loan-to-value ratio (LTV) of 60% or 75%, which means a larger deposit is required.
In addition, the most common fixed-rate mortgage transactions last two to five years. You are responsible for finding the duration that suits your specific situation.
If the mortgage transaction meets your needs and you are financially prepared, Mortgage broker It is recommended to plummet before raising interest rates.
If you are not sure, it is also wise to consult an independent financial adviser. This can help you avoid costly mistakes. You can also use Motley Fool’s Free mortgage calculator with Debt-to-income ratio calculator Find out if a particular offer is right for you.
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