Property finance specialist Anderson Harris is sharing three top tips with mortgage holders, to help them get ahead of further interest rate rises.
The Bank of England’s Monetary Policy Committee (MPC) has already raised the rate five times in the last seven months, to 1.25%. And that’s just the start, according to former MPC members. According to Adam Posen, President of the Peterson Institute for International Economics, a rate of 3.5% isn’t out of the question. MIT’s Professor Kristin Forbes echoes the projection. Both have served on the MPC.
In light of the rather bleak outlook, Anderson Harris’s Director Adrian Anderson has suggested three ways that mortgage holders can beat future rate increases.
1. Set a new budget.
Any mortgage holder with a cheap rate at present would do well to examine their monthly finances and re-budget, according to Adrian Anderson. He recommends re-budgeting to pay more now, so that when rates go up the shock element of the rise is removed. Re-budgeting now to pay off as much as possible each month can cushion the blow.
2. Lock in a new rate.
For existing borrowers, the advice from Anderson Harris is to explore locking in a new rate as soon as possible. Mortgage interest rates could soon hit 3% (up from 1% just nine months ago), with further potential rises on the horizon.
3. Consider paying down.
The more that mortgage holders can pay off while rates are low, the better. Those who are in a position to take advantage of overpayment options of up to 10% would be wise to consider paying off as much as they can before rates rise again. Although it’s important for mortgage holders to ensure they still have some cash set aside for a rainy day/emergency fund.
Now is the time to speak to an independent mortgage broker and to look again at your mortgage. It can pay to know what options are available – particularly if you’re in a position to lock in a deal with a bank now, for peace of mind as rates rise further.” – Adrian Anderson, Director, Anderson Harris