The recent interest rate rise to 0.5% should motivate mortgage customers to look at their financial position and take steps to improve it, not panic about rising household costs.

That’s the view of mortgage broker David Liddle, Director at Liddle Perrett, an independent mortgage and protection brokerage based in Kent.

“Any interest rate rise is likely to cause concern, but the mortgage market is resilient, and lenders are in a very different position from where they were in 2020.” David Liddle, Director, Liddle Perrett Ltd

Mortgage interest rates have seen a slow rise in the last quarter, and this increase by the Bank of England to control inflation is likely to put pressure on that trend to continue. But there are some key differences to previous interest rate rises.

• This interest rate rise is from an historic low of 0.1% to 0.25% and now to 0.5%
• Support for first-time buyers is stronger than it has ever been, with Government-backed schemes in place
• Despite rising inflation and cost of living, the economy is recovering well from the Covid-19 pandemic
• The bonfire of jobs forecast after the end of furlough hasn’t happened so confidence remains strong

These points mean that whilst interest rate increases are happening, more competitive mortgage products are still available to borrowers.

But the base rate if interest is forecast to continue to rise in small increments at least until inflation is brought under control, so households will continue to feel the pressure of increasing costs.

“Despite the interest rate rise, lending is still highly competitive, and mortgage rates remain affordable. But with rising household costs, families should be looking at their financial position, monthly mortgage payments, and energy costs and taking steps to fix or reduce those costs to weather the financial challenges that we all face in the coming months.” David Liddle, Director, Liddle Perrett Ltd

One area where households can make a clear difference to their outgoings is mortgage repayments. While interest rates do remain low, taking on a fixed-rate mortgage deal is a good option so that the monthly repayment is a known cost.

It could even be an option for those people already in a fixed rate to calculate whether they would save in the longer term by paying an early redemption fee in order to fix a rate for a prolonged period of time. Whilst that would, clearly, incur a cost upfront, over the period of the fixed rate the cost could be lower than switching to a standard variable rate, or moving to a fixed rate later on when interest rates are higher.

These can be complex considerations and calculations, so taking professional advice from a reputable mortgage adviser is important for consumers so that they have the correct information and options available to them.

“Taking a look at fixed-rate mortgage options now could save money in the longer term as inflation is tackled, and guarantee a fixed monthly mortgage repayment. This gives greater financial stability to households with an already rising cost of living. This applies to those people already in a fixed rate mortgage who may benefit in the longer term too. But borrowers should exercise caution, and seek professional advice to look at the real costs and financial implications.” David Liddle, Director, Liddle Perrett Ltd

To discuss any aspects of this media release or interest rate increases contact a member of our team.

More information here

Liddle Perrett Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE