Today – Thursday 2nd November 2017 – the Bank of England (BoE) voted 7-2 to raise the base rate by 0.25% to 0.5%. Although it is significant in that it’s the first time it has risen in a decade, people needn’t be concerned about the interest rate rise.
A year ago, interest rates were at 0.5% and it was widely agreed it was an excellent time to take out finance as interest rates had never been so low. As such, a 0.25% increase today is no cause for panic.
Of course, when the Bank of England (BoE) reduced the base rate to 0.25%, everyone was even happier, but this was an exceptionally low base rate and an increase to 0.5% won’t have much of an impact.
Looking back to when it was 0.5% previously, the high street was offering 2-year fixed mortgages at rates as low as 1.5% – or even lower sometimes – and when it reduced to 0.25% we didn’t see them drop much lower. Therefore, I don’t think we’ll see banks making significant changes to their products as they are unlikely to need to increase their margins.
There was a time when rates were as high as 15%, and today we have simply gone back to where we were a year ago, which was a positive time.
Five and 10 year fixes are lower than they’ve ever been before, so now is still a great time to fix in, regardless of the immediate interest rate rise. The mortgage market is still strong, so people shouldn’t be deterred from taking out finance following today’s announcement.
Enness has seen many fluctuations over the last 10 years, so is well equipped to assist clients make the most of their money in all market conditions. If you would like to discuss how this change might impact you and your financing options, we would be delighted to speak with you.