Don't panic! Interest rates have only been raised to 0.5%
By Alex at Aboda, Nov 5 2017 07:35PM
For the first time in more than ten years, the Bank of England have raised interest rates. But, there is no need to panic, the new rate of 0.5% still remains the second lowest rate on record.
While a number of banks and building societies have already announced that they will pass on the rate increase to borrowers, the impact of a rise will be minimal.
UK Finance report that over the last two years, over 90% of new mortgage and re-mortgage loans have been on fixed rate deals, and over half of all outstanding mortgage loans are now on fixed rate deals.
But for the 5 million borrowers on variable rate mortgages, some increase in their monthly mortgage is to be expected.
Nationwide estimate that the 0.25% rise will increase the monthly mortgage bill by £22 for home owners with an average £175,000 mortgage on their base mortgage rate deal.
However, since the introduction of the Mortgage Market Review in 2014, new borrowers from April 2014 are more prepared for a rise than they might have been in the past.
UK Finance estimate that, of mortgages lent since 2015, 92% were stress tested for an interest rate of at least 3% above their current rate - protecting those borrowers, lenders, and the housing market, from any shock to the system from this small increase in interest rates.
Historically, however, any hints of an interest rate rise have usually encouraged a flurry of home purchases from people looking to secure their home now, before any further rate rises occur.
So...if you are considering a home move in the near future, perhaps we should talk sooner rather than later!
You can contact me any time you wish to discuss your plans for moving home - I will always be happy to help and offer advice