This is the sixth time in a row that bank policymakers have kept the UK’s borrowing rate on hold, despite inflation figures rising yesterday.
Of the nine members charged with setting interest rates, three members voted in favor of increasing interest rates by 0.25% to 4%. This will add more appeal to expectations for a rate hike in November.
This week, the big six mortgage lenders raised rates on fixed-rate mortgages for the second time this month. Not only does this provide an indication of where interest rates may be heading, but it also means that anyone taking out a new mortgage deal or remortgaging will face higher interest rates now than they were at the start of September.
For those remortgaging from five-year deals locked in when interest rates were low, the repayment jump will be significant.
Experts advise anyone in this situation to act quickly before interest rates rise further.
What to do if you are a first time buyer
Ben Thompson, director of home relocation strategy at The Mortgage Advice Bureau, said: “A price hold may seem reassuring to a first-time buyer, but all it really tells you is that the bank hasn’t made their decision yet.
“If you have an offer in front of you, don’t assume that today’s calm is the new normal. Go and check if it is actually still the most favorable offer you can get.”
Advice for those remortgaging
If you’re due to remortgage within the next six months – you should talk to a broker about your options now.
What you’re offered depends on what that specific lender thinks will happen next, not what was just announced, Thompson explained. “Right now, they’re as divided as a bank,” he said.
“If your trade is coming to an end soon, it helps to actually know where you stand, rather than guessing the back of the key number.”
His advice has been echoed across the industry with experts advising anyone with a deal expiring within six months to consider their options.
Six months may seem like a long time, but this is the advanced period in which most lenders allow you to look for a new deal. If mortgage rates drop at this time and a better deal becomes available before closing, you can switch.
What to do if you are moving house
Thompson’s advice to anyone thinking of moving house is to not let uncertainty throw you off course.
“Provide wiggle room in your numbers, because ‘no change’ from the bank doesn’t mean nothing will change for you between now and the time you move somewhere else,” he said.
“No one can say for sure what the bank will do next. What you can do is make sure your home buying plans take into account every eventuality – and that’s exactly where an advisor comes in. Knowing what the latest decision means for you and your budget specifically is the part that requires a proper conversation, not a headline.”
