Rising Rates: What You Need to Know

Mortgage rates are rising again, and you may be asking why, especially when the Bank of England held the base rate at 3.75% in March. The key driver isn’t just what’s happening in the UK, but the uncertainty in the Middle East and the wider impact that’s having on global markets.

The ongoing conflict between the United States and Iran has created significant economic uncertainty. We’ve seen stock markets fall, with oil and petrol prices rising sharply due to concerns over supply. When energy prices increase, it often leads to higher costs across the board, adding to inflationary pressure.

Although the base rate remains unchanged for now, lenders price mortgages based on a range of factors. There’s also an element of caution from lenders. In times of uncertainty, the cost of borrowing money can increase, and lenders may adjust their pricing to manage risk. This combination of higher funding costs and market volatility is contributing to the recent changes in mortgage rates.

So, what does this mean for you? If you already have a mortgage, particularly a fixed-rate deal, there’s nothing to worry about immediately, your payments will stay the same for the duration of your deal. However, if you’re on a variable rate, approaching the end of your fixed term, or considering a new purchase, it’s important to be aware that rates are moving.

With inflation risks still present and markets reacting quickly to global events, there is a case for reviewing your options sooner rather than later. Many lenders allow you to secure a new rate around three to six months before your current deal ends. Securing a rate now could protect you against further increases and provide some peace of mind.

If you’d like to talk through your situation or explore your options, get in touch.

Catherine Critchley - www.ccfinancial.co.uk | 07790 802656