Mortgage interest at highest rate in almost a decade
Homeowners are facing a hike in costs following the Bank of England’s decision to raise the base rate for mortgage interest to 0.75%
Due to the increase, the base rate is now the highest it’s been since March 2009 following the economic crash.
This base rate is set by the Bank of England and is used by banks and building societies as a guide to calculate their own interest rates.
The Royal Bank of Scotland, NatWest and Ulster Bank have implemented this rise on their tracker rate mortgages with immediate effect, while Barclays will be pushing their variable rates up from September 1st 2018. However, while many banks and building societies will follow suit, they aren’t obligated to.
Stephen Dwelley, Director for Share to Buy, comments: “With the change announced by the Bank of England, any mortgage scheme that tracks the Bank of England base rate will rise with immediate effect however the outlook for fixed rate changes will likely be more muted, as the mortgage market continues to be very competitive. “
For those who are considering how this will affect their savings for a deposit, it’s worth noting that banks tend to push through rises on their mortgage rates pretty instantly but are often much slower to raise saving rates.
In a time of great uncertainty, it has become increasingly difficult to get a foot on the property ladder, but Shared Ownership can help first time buyers to take those vital first steps towards home ownership. The scheme allows buyers to purchase a share of a property – usually between 25% to 75% – paying a mortgage on the share they own, and below-market-value rent to a housing association on the remainder. A key factor here is that as the buyer only pays a mortgage on the share that they own – not of the full market value of the property – it also reduces the impact when interest rates such as this do increase.
The deposits for Shared Ownership homes are also considerably smaller, with buyers needing to raise as little as 5% of the price of the share they’re purchasing, not of the whole property.
Share to Buy is a one stop shop for affordable homes. On our website, you can search for properties, compare mortgages, and find out all you need to know about alternative home buying schemes using our FAQs and guides.