As we move toward the end of 2014, a possible interest rate rise continues to be an important topic and we promise to keep clients updated on the prospects of a rise and its likely impact. As we all know, an interest rate rise is likely to affect the mortgage payments of anyone on a variable rate or tracker mortgage, so keeping abreast of any likely rise is important.
Most analysts now seem completely convinced that the interest rate rise will not happen during 2014. The Monetary Policy Commission (MPC) at The Bank Of England, who decide on any rate rise, have two of their monthly meetings remaining this year and it is seen as unlikely that they would vote for a rise at either of those meetings. The question now is when in 2015 will the rise happen?
Before the middle of October, the most popular forecast for a rate rise was February, but as information was released on our own economy and how Europe was doing, some analysts felt that this might be too soon. April 2015 has become a popular prediction, but both April and May would be unpopular dates with government. There is a general election in May 2015 and a rate rise could skew voters thinking. There are therefore some suggestions that the rise may have to wait for as long as June or July 2015, by which point the economy will have changed substantially and the MPC will have to take into account various other factors all over again!
The overall goal seems to be to get interest rates to around 3.0% by the middle of 2017. These increases will come in small increments. With an interest rate currently at 0.5%, frequent rises of a quarter or half a percentage point, over the next two-to-three years are seen as likely.
For mortgage holders, keeping an eye on both the long and short term plans are vital. For those looking to remortgage soon, getting a fixed rate mortgage before the first interest rate rise could pay dividends. Meanwhile, in the long term, mortgage holders will want to beat the rise to 3.0% for their remortgage if possible as, once that level is reached, it could make a real difference to the amount you pay per month.
As always, if you would like to discuss your current mortgage or your opportunity for a remortgage, please do just get in touch via our Contact page and we will be more than happy to discuss your options with you.
Your property may be repossessed if you do not keep up repayments on your mortgage.