Despite numerous false predictions, it does now look likely that this sustained period of low interest rates is finally coming to an end. It has always been a matter of "when" interest rates started going up rather than "if" but we do get greedy and keep wanting more!
The Governor of the Bank Of England has recently stated that he expects a judgement on rate rises "around the turn of the year". For once, this is not a City analyst trying to guess what is going to happen using a myriad of market data and trends that few people actually understand, it is the head of the institution that makes the decision. So this announcement needs to be taken seriously.
As well as indicating the timing of the rise, Mr Carney also suggested that over the course of 3 years, the Base Rate is likely to end up "half as high as historical averages" - which means between 2% and 3%.
In a fine piece of arse-covering, he did add the caveat that shocks to the economy could change the timing and size of any rate rises. This provides a neat excuse if his prediction does not come to fruition. A career in politics surely awaits!
Nevertheless, the message is still pretty clear. Brace yourselves as the cost of mortgages will be going up very soon.
For example, a 2% rise in interest rates would mean an increase in monthly payments of £170 for a 25 year repayment mortgage of £150,000. That is a lot of extra money to find each month.
So what can you do to stop this happening?
The most sensible idea is to look at fixing your interest rate. This will mean that for either 2,3 or 5 years, your mortgage payments are unaffected by any change in the Bank of England Base Rate. Your rate is secured and during this period you can sit back and relax knowing that your payment is not going to be any different.
With interest rates as low as 1.75% for a 2 year fixed in some cases, fixing your interest rate does not have to mean that you will end up paying more than you are now.
The best idea is undoubtedly to have a Mortgage Review to see what deals are available to you, if you could improve your current position and protect against your payments going up.
As luck would have it, Welcome Mortgage Solutions Ltd offer such a Mortgage Review Service! And the best part? It is free. Yes that's right. Free! You can check to see if there is a way for you to save money at no cost at all.
Simply call 0844 736 1920 to arrange your free review. Happy to help!
There have certainly been predictions and warnings of rate rises before (not least by mortgage brokers). However, this is the clearest indication yet that it is not just hot air from people with vested interests but a warning from the man in charge that this is going to happen. And the "turn of the year" is only 5 months away so make sure you do something now before it ends up costing you more.