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How an interest rate rise in the coming months could impact your mortgage



Check out this article from Rightmove – How an interest rate rise in the coming months could impact your mortgage

After weeks of speculation, the Bank of England has announced it is keeping interest rates at 0.1% this month, although a rise could still happen before Christmas.

Interest rates have remained at the historic low of 0.1% since the start of the pandemic, however the Bank has indicated that modest rises are expected in the coming months. The next decision takes place on 16th December.

What is the Bank of England base rate?

Set by the Bank of England (BoE), the base rate is a benchmark for the cost of borrowing money. It is important to homeowners because mortgage lenders (and credit card companies and loan providers) base the rates they charge on it. If the base rate rises, so will the cost of borrowing.

Why is rising inflation an issue?

From rising energy bills, to an increasingly expensive weekly shop, the rate of inflation affects everything we need to pay for. Grocery prices are estimated to have already increased over the past month or so, as manufacturers pass on the rising costs of labour, materials, energy and transport.

“Higher inflation will clearly exert a squeeze on household budgets,” explains Paul Archer, Nationwide’s Senior Manager – Mortgages.

To relieve the squeeze, the BoE has a target of halving inflation to 2%, and one of the key ways to achieve this is by increasing interest rates.

How will increasing interest rates affect my mortgage?

Any increase in rates could have an impact on your monthly mortgage payments, although it depends on what sort of mortgage you have. If you have a fixed-rate deal – and Paul Archer says around 80% of homeowners opt to tie themselves in to a set rate for two or more years – the good news is that it will be business as usual, and your monthly repayments won’t change, at least until you need to remortgage.

But, if you are among the 20% of borrowers with a variable or tracker mortgage, or your fixed deal is coming to an end, your monthly outgoings will almost certainly go up.

The interest rate paid on tracker mortgages is usually the BoE base rate plus a set percentage. For example, the current base rate of 0.1%, plus 1%, would mean you would be paying 1.1% interest right now.

A standard variable rate is what you’ll be transferred onto if the term of your fixed rate deal, or discount deal, ends before you remortgage. These rates tend to be higher than other mortgage rates.

Rate increases are likely to be implemented slowly. Historically banks have gone for 0.25% at a time to soften the blow a little.

To put this into perspective, if you had a 25 year, £250,000 mortgage, and were paying 2% interest, your monthly bill would be £1,060. If your rate was increased to 2.25 per cent, that payment would increase to £1,090 per calendar month. If it rose again to 2.5 per cent, your mortgage would cost you £1,122 a month.

Has all the speculation about interest rate increases started to have an impact on mortgages already?

Yes. Most high street lenders have already begun increasing their interest rates in anticipation of a rate rise before or after Christmas. Last month, Barclays, HSBC, NatWest, Santander, and TSB all raised prices on some products.

“Fixed-rate mortgages are based on swap rates,” explains Paul Archer of Nationwide. “In recent weeks, swap rates have increased as the financial markets factor in a rate rise, and as such the cost of funding for banks and building societies has increased.

“This in turn is factored into the mortgage rates offered by lenders.”

This might sound like terrible news, but it’s important to keep things in perspective. There are still two- and five-year deals out there at around the 1% mark, which is very cheap lending compared to what homeowners were paying a decade or two ago.

What can I do about it?

If you’re on a tracker or variable mortgage, you could shop around to see if you can find a cheaper option with a fixed mortgage, although you might have to pay an early redemption fee first, and that might wipe out the benefits of swapping immediately. You should speak to a qualified mortgage advisor if you are unsure which options would be best for your individual circumstances.

If your fixed rate deal is due to end within the next few months, you could see what your options are for locking into a good deal now, while you can. Many banks will allow you to apply for current deals several months before your mortgage expires. Because this can be a lengthy process, it’s a good idea to start this process within six months of your current deal ending.

Another piece of good news is that the more you have paid off, the better mortgage deal you’ll be able to find. “The more equity you have in your home, the lower rate a lender is likely to offer,” says Paul Archer. “Rates at 95% loan to value (LTV) are higher for those at 60% LTV.

“If, during the term of the deal, you manage to move into a lower LTV band, you could find you are offered a lower rate than you were on before,” he says.

5 Reasons to Sell Now













Check out this article from Rightmove – Five reasons why it’s a great time to sell


The autumn property market remains hot. This month, we’ve seen record asking price rises across every region of Britain and for every property type, from first-time buyer homes to family houses. This ‘full house’ is an extremely rare event, happening for the first time since March 2007.


So what does this mean if you’re thinking of moving? With all this going on, you might think it’s best to wait. But here are five reasons why this could be the perfect time to sell.


1. You’ll be putting your home in front of a record number of potential buyers


There are more people looking to move than the number of homes available to buy, and it’s a hugely competitive market, so sellers have the best chance of finding a buyer this year than at any other time in the past 10 years.


2. There’s a good chance you’ll get the best price for your home


Asking prices have hit record highs this month, so if you’re thinking of selling in order to make a move next year, it’s a great time to arrange a property valuation from an estate agent. You might discover that you can sell your home for a lot more than you bought it for, even if you’ve owned it for just a year or two.


Now is also a great time for homeowners looking to sell and cash out if you’re downsizing, or don’t need to buy another property.


3. Your budget for your next home might be bigger than you think


If your home is valued for more than you bought it for, the search for your dream property might start to look different. New possibilities that you may not have considered could start to open up, from locations you assumed you were priced out of, to homes offering more space, or a garden. And the good news is that we’re starting to see more properties coming to market this month, so fresh new choice is slowly growing.


4. You will become a ‘power-buyer’


With many homes being snapped up quickly and sellers having a choice of competing buyers, ‘power-buyers’ — those who have already sold their own property subject to contract or have nothing to sell — will have the most powerful negotiating hand when they eventually find ‘the one’.


Our property expert Tim Bannister says: “One agent’s analysis that 87% of their sales agreed were snapped up by buyers who were already in a position to proceed is fairly typical of reports from many agents. Buyers being able to prove they are mortgage-ready or have cash in the bank helps them get up the pecking order.”


5. Mortgage interest rates are still low


Mortgage interest rates are lower than ever and lenders are keen to offer mortgage loans in a competitive market. The window is open for movers who wish to sell and buy again before a likely interest rate rise, although it’s widely expected that rates will remain comparatively low.

Welcome the new award winning team

We are proud to announce we have won the All Agents People Awards for customer service in NW11 in both Sales & Lettings. It’s a great achievement and nice to know our clients are happy and recognise our hard work. Thank you for all your kind feedback. Here’s to the next one!

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Supporting Our Community

We made a donation to Jami UK last week. They work with individuals, communities and organisations to help prevent mental illness from developing, improve early intervention and promote wellbeing. Jami UK is a charity close to heart and provides much needed support, especially with everything currently going on in the world.

Have a look at their website for more information:

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Richard & Luke Rind


Buy-to-let tips

If you’re considering purchasing your first buy to let property then these top tips will help you find the right property and get the most out of it.

  • Make the most of it: For those who are thinking of renting to students why not consider converting the living room into an extra bedroom to help boost your rental returns.
  • Go modern: A fully modernised property will let out a lot quicker than an older out of date property and will also need less maintenance to keep it in top condition.
  • Check references: Make sure you check potential tenants carefully, from previous landlord references to credit checks; these simple measures can make sure your tenants won’t be a problem.
  • Redecorate and clean: Following a long tenancy make sure you take the time to thoroughly clean your property and redecorate to keep it look fresh and modern.
  • Don’t be greedy: It’s better to hold onto a good tenant paying less, than a bad one paying more
  •  Consider cash: It could work out cheaper to re-mortgage your current home than taking out a buy-to-let mortgage so make sure you do your sums and always get professional advice.

Whether you’re planning on being completely involved in the maintenance of your property or you want to take a step back and let someone else do everything for you, at Hausman & Holmes we can help. We are a full-service lettings agency and can tailor our service to your needs. Check out the difference between our Letting Service and Letting & Management Service here