In the last six years interest rates have been at their lowest ever levels. We have seen clients enjoying rock bottom mortgage rates. Those sitting on standard variable rates (SVRs) have watched the Bank of England's monetary policy committee hold base rate at 0.5 per cent for more than five years.
We know some have paid their lowest monthly payments. Fixed rate deals have also fallen as banks seek to lure people away from standard variable rates.
Cheap government finding schemes also saw fixed rates drop significantly. Despite banks' best efforts, we are not surprised that more than two-thirds of borrowers sit on standard variable rates. Many have grown accustomed to interest rates remaining static and low.
But these are not normal times and a adjustment among borrowers is coming.The prospect of a Bank of England base rate ruse will spark a frenzy.
Those who would normally choose security over variable rates will rush back to fixed deals.
New are expecting to see a massive rush of borrowers to check their remortgage options. Borrowers who have not reviewed their deals for the better part of a decade will be forced into action.
Nothing focuses the mind more than a higher monthly mortgage bill.
Act now?
So, the question borrowers should be asking us do they act now before the rush? Simple economics means high demand for fixed deals will see higher prices.
Right now fixed rate deals could be lower than in the future. Borrowers should plan ahead and be assessing their finances now. For those who have lived on 0.5 per cent base rates, could they cope with higher bills?
Would you be able to afford your mortgage at 3 per cent interest rates?
It could be worth paying slightly kore now to avoid the shock of higher hills further down the line. At the very least it is worth taking professional advice on how to act. It will always pay to be ahead o the curve and spot market trends. A regulated mortgage adviser can explain your options in full.
It may be that you would prefer to stay on a variable rate. No one knows when rates will rise me it may only happen gradually.
Bank of England governor Mark Carney says it may not happen for some time yet. He says rates may even settle around 3 per cent as the normal.
Before the crisis rates were settled around 5 per cent on average.
In the early 1990s rates rose as high as 15 per cent for a while.
We live in different times hit these examples illustrate how quickly rates can change.
We want out clients to be fully informed about the mortgage market and they make their own choices. Every person will have different needs and this will create a different strategy to tackling interest rate movements.
The most important thing is to have clear strategy.
Rates will be rising and there will be a rush to change mortgages so act now.
