Low rates and what it means for the future

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Rates are incredibly low right now, but what does this mean for the future? Watch a short video about the current low rates and what you need to be aware of over on my YouTube channel and read below for the full transcript…

So one of the things that we get asked a lot at the moment is about rates*. Rates are extremely low, and there’s a lot of press attention on what the rates are doing in the mortgage market. So we recently had an HSBC rate launch that was under 1% for five-year fixed rate, which is pretty long because as long as your loan to value is 60% or less. Now that’s at the time of recording, which is on the 15th of September. But the point is that there is a rate war going on and you as a customer needs to know what that means for you. Low rates are obviously brilliant for you guys. It’s a great opportunity to fix yourself a rate that is really, really competitive, particularly if you’re in a place where you can fix it for as long, a period as five years, for example.


And now what does it mean for the future? Well, we just need to wrap that knowledge around you so that you understand that your mortgage payment is likely to increase when you come to remortgage. So if you are purchasing with these low interest rates, it’s just really important that you understand that they are incredibly low and that they are likely to go up in the future because it is unusually low interest rates right now. So you’ve just got to be prepared for that now in your documents. So when your broker gets your mortgage, they’ll go through a document with you. And that gives you a bit of an idea as to how your monthly payment would change if the interest rates do increase. So it’s good to make note of that and make sure you’re happy. Now our job as your broker is to make sure you can afford it now and in the future when your rate changes. So that is factored into our advice and our lenders would also look at that. So we are stress testing you anyway, with your mindset. It’s important that you understand that that’s likely to happen, or at least that you’re prepared for it to happen and that you’re not just thinking my mortgage is this much a month and that’s it. However, that’s the negative potential. That’s the negative, as long as you know, it’s still a positive right now because the rates are still incredibly low.

Now, what does that mean for those of you who are tied into a fixed rate? It means it’s probably a good idea for you to review it because some of you will be on really high interest rates compared to what you could get now. And even though you’ve got an early repayment charge, it might actually still be worth you switching your mortgage and paying that early repayment charge to get yourself that lower interest rate. And we’ll look at that for you and tell you a really balanced approach and a balanced view there because it’s our job to. So we won’t do it just to get you the low interest rate if we haven’t worked out that it is the best thing for you to do. So, even if you have got a remortgage right now could be a good option for you to actually look at that. As always get in touch with us via our website and social media, and we look forward to helping you guys soon. Hope this has helped. Thanks.


*Example rate – 0.89% 2 year fixed rate (3.2% APRC)

Example is based on a property value of £900,000 and deposit of £360,000. Mortgage is £540,000 over a term of 30 years on a capital & interest basis. Arrangement fee is £999 and can be added to the loan. Initial rate of 0.89% applies for 2 years and then reverts to SVR (3.54%). The overall cost for comparison is 3.2% APRC. Monthly payment is £1,709.70. Total amount payable over 30 years is £840,044.


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