It is observed that the cost of living has been rising at a continuous rate. The Bank of England has predicted the base rate will be increased up to 0.5% now while it was 0.25% previously.
Suppose the Central bank decides to increase the rate by any percentage. This would be the first time they increase the rate back-to-back. The previous time the increment was done was in June 2004.
People having mortgages are worried about how they will deal with the sudden change in circumstance.
To explain the condition and ease the concern of the people, UK Finance has explained that about 74% of mortgages currently are fixed. It also reveals that for the majority of the mortgage bearers, nothing would change much.
- If people have a fixed mortgage, they should not worry. However, they need to get their mortgages locked in again. But any new fix being remortgaged will cost more since it will be done based on new rates. Therefore, it is suggested for everyone to maintain a check on what mortgages are coming to an expiration date.
- The people in tracker mortgage will suffer since the rates will precisely increase. It is suggested to look for the option to get it switched to a better deal.
To avoid these circumstances, the two suggested options are:
- Track your fixed mortgage and if it is coming to an end in the coming 5-6 months. Get it remortgaged on a better deal. This will make you able to lock better deals for the coming months.
- If your mortgage is on a tracking basis, your mortgage will likely rise to 0.25% by Thursday if the decision finalizes. It is better to get switched on deals that will help you get on the safer side.
People who have been saving are also questioning the circumstances and are trying to figure it out.
- These rates being changed will affect all sorts of saving accounts. People with saving accounts are usually glad to hear about the rates being increased. Since they are to e benefitted from the increased rate.
- People with a fixed-rate account are immune to any change. Since the rates are locked from the beginning of this time. The best option is to get pitched in for a better deal.
- People with variable rates are enjoying the rates going up since they are fruitfully profiting. It is still not guaranteed if such people will benefit since it is on the bank on what rate and when do they implement the rates.
People who are ready to switch must decide quickly. The top best alternatives are either Investec, with 0.71%. Union Bank of India with 1.4% and Charter Savings Bank with 1.62% of the rate.
The minimum required for Union Bank of India is £1,000, while Investec and Charter Savings bank require £5,000.