An average UK homeowner may need to pay an additional £930 per year from their mortgage bill if the Bank of England (BOE) imposes a 1% increase in the future, according to Savills.
Lucian Cook, Savills head of residential research, said that this reinforced their outlook on a ‘more subdued house price growth over the next five years’. The increase will also mark the end of historically low rates, which will restrict the buying capability of prospective homeowners.
Savills expects that the immediate impact of the BOE increase will hit those on flexible rate deals. Their collective annual bill will rise by £4.3 billion, while the remaining borrowers on fixed-rate deals will be the next to notice the financial impact.
Buy-to-let landlords will also have to adjust to the rate increase, as they will pay an additional £2.4 billion from their mortgage bills. If you plan to invest in a buy-to-let property for the first time, experts suggest that it is best to take note of the regulatory changes that will shape the market this year.
Some regulatory policies for buy-to-let properties in 2018 include the ombudsman scheme, which will require all landlord registration to resolve disputes with their tenants. Energy efficiency in buildings will be a key change, as well. By 2020, all existing properties need to be certified with at least an E rating from the Energy Performance Certificates.
You should likewise compare quotes from a remortgage solicitor or a licensed conveyancer, especially now that mortgage rates may increase in the future. Some tools allow you to compare prices from a wide selection of property conveyancers and lawyers nationwide, so you should consider using them instead. Remember that it is better to get as much expert help than regretting your unpreparedness in the future.
A higher mortgage rate affects not only homeowners, but also property buyers. You surely need to do an extensive comparison of rates to find the best prices for your budget.