A mortgage is a big financial responsibility, and for this reason people will want to keep their payments as low as possible. This week, the Bank of England chose to keep its interest rate static at 0.1%, despite speculation it would rise in November. However, that is not the end of the matter, and many experts are predicting an imminent hike.
Mr Coulson continued: âThere was a fear that the stamp duty incentive would put the housing market on steroids and then there would be a crash.
âBut it just hasn’t been, and people are still very interested in paying off their mortgages because of the interest rate situation.
âIt’s been an interesting thing to try to predict because we don’t know what’s going to happen next. “
Heron Financial has seen its clients’ priorities change, and this is in large part due to concerns about interest rates.
Mr Coulson explained that many more people are considering longer-term fixed rates – asking for five years and maybe even longer, to take advantage of lower interest rates.
But the mortgage expert has issued a word of warning, although it seems like a wise option.
He said: âIf I had to issue a warning about this, it would just be to keep an eye on the early redemption charge.
âWe’ve had clients who got fixed last year or at the end of 2019, and now they’re looking to relocate again – but it could be potentially difficult for them.
âIf they have a large prepayment charge, they might pay out of the blue. This is something that is important to keep in mind.
âWhile this can be a great time to get and fix a mortgage, you still need to be careful. Do you know where you will be in five years? What will your life be like?
âWe ask clients to think carefully about longer term solutions, even if the rates are quite good at the moment. “
Mr Coulson said the mortgage market is about to change right now, so he urged Britons to take action now if they hope to find the best deal, especially in a re-mortgage situation.
He added, âMost of the time, with a remortgage, there will be no upfront fees, and the fees are much cheaper.
âIf the option is there to go out and get what you want now, then do it. Talk to a broker and get advice. There is nothing wrong with getting a rate now. You can always re-evaluate this if things do eventually change.
âWe’re all trapped in the interest rate forecast, but you won’t lose anything and you will have the product ready to go and wait for you if you need it.
âUntil this remortgage takes place and this product changes, you can do whatever you want – stop the process, consider a new offer – whatever you want. If there’s a chance for you to get the ball rolling, then we generally say you absolutely should.
However, Coulson also concluded by pointing out that interest rates are not the only aspect of finances that people should be watching.
The rising cost of living is also of concern to those looking for a mortgage, and indeed those with an existing arrangement.
He said: âIf we see a scenario where the cost of living rises to what is expected in terms of fuel, gas and electricity for example, then there is a potential scenario where it could impact your borrowing potential.
âLenders will look at the data and a basket of assets to develop their borrowing modeling, and if all of a sudden that data changes, then you may not be able to borrow as much in six months as you would. today.
“We say start now if you can, and then regret it later.”