Mortgage Costs Increase – Now is Time to Act!

It’s been an eventful few weeks in the mortgage world, with Rishi Sunak’s announcement of the Budget 2021, mortgage rates on the rise and inflation increases all dominating the financial press.

So, what does all this mean for our Mortgage Light customers? We’re here to explain all.

Lock into cheap deals whilst you can

Reports of a potential base rate increase by the Bank of England early next year has triggered some of the nation’s biggest lenders, including the ‘Big 4’ banks, to raise their mortgage rates in the past couple of weeks, and more could be following suit very soon.

If you are thinking of moving house or if you are within your six month remortgage period, you may want to seriously consider taking advantage of the low fixed mortgage rates that homeowners have been enjoying lately whilst they are still around. Whilst the base rate sitting at 0.1% has fuelled a property boom throughout 2021, this low rate was never going to last forever.

If you are in a position to do so, don’t wait around to lock in a cheap deal. Even though rates are rising, lenders have huge targets to meet so will want to remain as competitive as possible to attract customers. Now is the perfect time to secure yourself a deal that will pay off in a few months time. The majority of lenders allow you to look into this up to 5 months before your current deal ends.

Inflation and the energy crisis

So, why is the Bank of England potentially increasing the base rate and causing this chain reaction? The change comes as a bid to stabilise the forecasted 4% inflation that the nation is set to experience in early 2022. This inflation will cause the cost of living to rise, which will of course in turn increase house prices around the UK. The current energy crisis is also set to send utility bills soaring by 30% in 2022.

Both of these factors, alongside the rate rise, are bound to affect the affordability for both borrowers taking out new mortgages and existing borrowers on variable rates who may already be feeling the financial pinch following the pandemic.

For this reason, it’s time to take action and snap yourself up a cheap rate whilst they last. Potential change is on the horizon and we want to ensure that our customers are in the best position possible if and when it happens.

Positive news from the Budget 2021

All that aside, there are definitely some positives to come out of Budget 2021. Rishi Sunak announced that an impressive £1.8 billion is earmarked to increase housing supply, bringing 1500 hectares of brownfield land into use for new builds. £11.5bn is also being set aside to fund 180,000 new ‘greener’ homes on brownfield land.

This will result in more housing to meet the current market demand, which will be music to the ears of many people currently house-hunting and experiencing the off-balance ratio of buyers to sellers. With this in mind, now is a great time to get out there and start looking for your next home.

Additionally, the Help to Buy scheme is still available to take advantage of, but now coming into its final 15 months and set to end in March 2023. Help to Buy is still a popular option, with 44% of people surveyed by us here at Mortgage Light revealing that they would consider using it.

Ready to lock in your new deal? Got questions? Still unsure about what these potential changes mean for you and your mortgage? Don’t worry. We’re here to answer your questions, put your mind at ease and help you take the next step.

Get in touch with us at Mortgage Light by calling 01908 597655.