A warning by Mark Carney, Governor of the Bank of England in September, that a disruptive no-deal Brexit could cut 35 per cent off house prices added to existing market jitters. Mr Carney’s warning represented an extreme scenario, and the ultimate effects of Brexit on house prices and mortgages will depend on the position at the point of departure and the repercussions for the economy. The silver lining of the Brexit process has been low interest rates. “The uncertainty of Brexit is helping to keep mortgage rates low and hence the costs of home ownership low,” said Ray Boulger, of brokers John Charcol.
Moneyfacts have analysed the effects of August’s increase in the base rate of interest to 0.75%. Their data shows that while variable rates have seen a rise, no average has so far increased by the full 0.25% meaning borrowers can breathe a sigh of relief, although they may still want to adjust their budgets to account for some rises in their monthly repayments. Two-year fixed rate mortgages have seen the average rate remaining the same since the base rate increase. By not increasing rates, fixed rate mortgage providers can appeal to those who are now considering remortgaging, meaning that there are attractive deals available to those thinking about switching from a variable rate. In November the five-year fixed mortgage rate has risen for the first time in four months which may be the start of an upward trend. Demand for five-year fixed mortgages has, however, grown, with recent figures showing that these deals account for 47% of the total remortgage market. Darren Cook, finance expert at Moneyfacts reported. “This is unsurprising, as many borrowers look for some certainty in a very uncertain economy.”
Due to the competition in the market, there has been little difference between the two-year and the five-year rates to date, and demand looks set to keep driving rates downward. As a result of all this, Darren concluded that “borrowers coming to the end of their deal or sitting on an SVR who are considering a five-year fixed rate mortgage should look to remortgage as soon as possible, as with rates rising, it may be a case of now or never to secure a good deal.”
At Spot On Mortgages we provide an across the market, personally tailored advice and arrangement service for mortgages. In light of the potential uncertainty about rates, it is worth taking time to investigate the options available. Get in touch to discuss your specific circumstances.