Households in the UK are facing an “unsettling” time as mortgage rates remain on pause, leaving many struggling to make ends meet amidst rising bills. The Bank of England’s decision to keep the base rate unchanged at 5% on Thursday follows a recent 0.25 percentage point cut, leading to concerns for those remortgaging onto new deals who could experience significant repayment increases. This comes at a time when other expenses are already on the rise.
While mortgage rates have been gradually decreasing, financial experts warn that homeowners may still face challenges, especially with a potential “painful” autumn Budget on the horizon. Alice Haine, a personal finance analyst at Bestinvest by Evelyn Partners, highlighted the ongoing cost-of-living crisis, stating that despite recent price hikes, many are still struggling financially.
For homeowners with tracker mortgages, the wait continues to see if their repayments will ease at the next meeting. Those with fixed-rate deals are urged to prepare for substantial repayment jumps upon refinancing as their current deals expire. Despite the Bank of England’s cautious approach, Simon Gammon, managing partner at Knight Frank Finance, predicts that mortgage rates will continue to decrease due to a positive global economic outlook.
Industry experts stress the importance for savers to act swiftly to secure the best deals amidst the downward trend in interest rates. Myron Jobson, senior personal finance analyst at interactive investor, advises savers to take advantage of competitive savings options promptly. Rachel Springall, a finance expert at Moneyfactscompare.co.uk, emphasises the significance of reviewing savings accounts following the recent base rate cut, recommending fixed-rate bonds and cash ISAs as viable options.
Despite the uncertainty surrounding mortgage rates, stakeholders in the property market remain cautiously optimistic. Iain McKenzie, chief executive of the Guild of Property Professionals, notes that confidence is gradually returning to the market, with increased activity observed following the recent rate cut. Nicky Stevenson, managing director at Fine & Country, expects a surge in property market activity this autumn, driven by heightened buyer and seller engagement.
In a time of financial flux, experts advise households to stay vigilant with their financial decisions and seize opportunities to secure favourable rates. As the economic landscape continues to evolve, proactive financial planning is crucial to navigate the challenges ahead.