Mortgage warning: Interest rates ‘on the cusp of change’ – Britons urged to act fast

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Interest rates: Expert discusses Bank of England decision making

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A mortgage is a significant financial responsibility, and for this reason people will wish to keep their payments as low as possible. This week, the Bank of England chose to keep its interest rate at a static 0.1 percent, despite speculation it would rise in November. However, this is not the end of the matter, and many experts are predicting an imminent rise.

Analysts have described the situation as a matter of ‘when, not if’, and thus when it comes to mortgages, it is likely to be key to take action.

This was an opinion expressed by Matt Coulson, founder and director of Heron Financial, who spoke exclusively to Express.co.uk.

He said: “We have seen a real spike in enquiries recently, and enquiring about buying a property, as well as their remortgage situation.

“People are really looking at what could happen if things do move in terms of interest rates.

“We are talking to clients about their reasons behind making certain moves, and most of it is rate-related. They look at what they can afford, what they can borrow, but they are primarily concerned about interest rates.

“There are even people who hadn’t planned to move for two or three years who are saying the circumstances are so favourable they just have to take advantage of them.”

While some providers increased their rates and offerings ahead of the Bank of England decision, others held on to see what the central bank would decide.

For now, the rate remains at 0.1 percent, but there have been other market movements Britons may wish to keep an eye on.

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Mr Coulson continued: “There was a fear that the stamp duty incentive was putting the housing market on steroids, and that afterwards there would be a crash.

“But this just hasn’t been the case, and people are still very much interested in sorting out their mortgages because of the interest rate situation.

“It’s been an interesting thing to try to predict, as we don’t know what is going to happen next.”

Heron Financial has seen the priorities of their customers shift, and much of this is down to fears about interest rates.

Mr Coulson explained many more people are looking at longer-term fixed rates – asking for five years and maybe even longer, to take advantage of lower interest rates.

But the mortgage expert did issue a word of warning, despite this seeming like a sensible option.

He said: “If I were going to issue a word of caution around that, it would just be to keep an eye on early redemption charges.

“We’ve had clients who fixed themselves in last year or the tail end of 2019, and now they are looking to move again – but this could be potentially tricky for them.

“If they have a big early redemption charge, they could be paying out of the nose. It’s something which is important to bear in mind. 

“While now could be a very attractive time to get a mortgage and fix in, you should always be mindful. Do you know where you are going to be in five years? What will your life look like? 

“We’re asking clients to think carefully about longer term fixes even though rates are fairly good at the moment.”

Mr Coulson stated the mortgage market is currently on the “cusp of change”, and thus he urged Britons to take action now if they are hopeful of finding the best deal – especially in a remortgaging situation.

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He added: “Most of the time with a remortgage there won’t be any upfront costs, and fees are a lot more favourable.

“If the option is there to go out and get what you want right now, then do so. Speak to a broker and get the advice. There is no harm in securing a rate now. You can always reassess this if things do end up evolving.

“We all get caught out on interest rate predictions, but you won’t have lost anything, and you’ll have the product sitting there ready and waiting for you should you need it.

“Until that remortgage takes place and that product switches across, you can do anything you like – stop the process, look at a new deal – whatever you like. If there is a chance for you to get the ball rolling, then we generally say that you absolutely should.”

However, Mr Coulson also concluded by stressing interest rates were not the only aspect of finances people should be keeping an eye on.

The rising cost of living is also a cause for concern for those who are looking to secure a mortgage, and indeed those in an existing arrangement.

He said: “If we see a scenario where the cost of living increases to what is predicted in terms of fuel, gas and electric for instance, then there is a potential scenario where this could impact your borrowing potential.

“Lenders will look at data and a basket of goods to work out their borrowing modelling, and if all of a sudden this data shifts, then there is a potential you might not be able to borrow as much in six months’ time as you would today.

“We’re saying make a start now if you can, before you end up regretting it later down the line.”

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