Posted on 26.8.14 by Marge Hardy
Recent reports in the media have suggested that, with the economy improving, the interest rate could be set to rise. Over recent months mortgage interest rates have steadily been increasing but could be set to rise dramatically.
According to the Mortgage Advice Bureau, the rate of people re-mortgaging their property rose by 21% in July and according to an article in the Telegraph, re-mortgages have ‘outpaced purchases’.
The pending rise has led more homeowners to seek better deals on their mortgages in order to reduce potential costs. The impending rise in interest rates could see mortgage payments of those homeowners who are on variable or tracker mortgages rise dramatically, indicating in part the reason for the rise in re-mortgages.
The Council for Mortgage lenders stated that 5,400 properties were repossessed in the second quarter of the year with Paul Smee; Director General of CML saying ‘Rates will rise at some stage, of course, and borrowers should be planning for that now.’
However positive the improvements to the economy may be, this could potentially cause concern for borrowers who might face re-payment problems.
The CML suggest that the rate rise will be measured and gradual, and reinforce the message from the Bank of England ‘that rate rises will come at a time when the economy is in a position to withstand a tightening in monetary policy.’
However, a recent survey from comparethemarket.com reveals that one in three homeowners are not even aware of the predicted rise in interest rates but despite this, over 42% of mortgage enquiries to the price comparison site relate to re-mortgaging, reinforcing the need for re-mortgaging and the increased concern for homeowners.
If you need advice or wish to discuss the re-mortgage of your property, you can contact our Residential Conveyancing Team on 0161 930 5117.