Last week, the Bank of England slashed the base interest rates from 0.75% to 0.25%. The last time interest rates were this low was back in 2016 after the initial Brexit vote, when there were fears the economy might be in trouble.
However, August 2016 saw a 0.6% increase in house prices so, despite the recent drop, we’re expecting the housing market to remain strong.
We understand all this talk of finance, interest rates and housing market trends can be confusing so we’ve taken the time to break it down.
Will houses prices drop?
There’s no evidence that a drop in interest rates will result in cheaper house prices. When looking back to 2016 when interest rates were at the same level, house prices actually increased as the demand for properties increased. The prospect of cheaper mortgage rates pushed those sitting on the ledge to list their house on the market and inspired first-time-buyers to put down their first offers.
Will my mortgage payments change?
This answer to this depends on the type of mortgage you have. Those with tracker mortgages will likely see a drop in monthly payments as your lender tracks the rise and fall of interest rates. Those on a fixed-term mortgage won’t see any changes unless you're nearing the end of your fixed period. If this is the case, you’re in luck as you can shop around and potentially find a cheaper rate this time around.
Should I switch my mortgage?
Most fixed-rate mortgages come with an early repayment fee if you wish to switch your mortgage early so it really depends on your current interest rate and how long you have left on your fixed term. Sometimes it can work out cheaper to switch early when savings out-weigh the initial penalty charge over time, however, this will differ person-to-person.
Independent financial advice from Simpson and Weekley
At Simpson and Weekley, we have an independent financial advisor based in our branch. If you have questions about your mortgage and need more help and advice, give us a call today and we can arrange a meeting for you. All advice given by Simpson and Weekley Financial Services is independent of any product and takes into consideration the whole of the market to help find you the best mortgage for your circumstances.
Call us today on Rushden: 01933 418917 Wellingborough: 01933 224953 or email rushden@simpsonandweekley.co.uk / wb@simpsonandweekley.co.uk