Is an interest rate rise around the corner and how could it affect mortgage rates?

According to the Governor of the Bank of England, economic conditions are rapidly approaching the point where interest rates will have to rise.

The BoE has indicated that the base rate is likely to increase in the next few months, rising from its current level of 0.5% to 3% in the longer term.

While an increase to 3% maybe gradual, it will have a significant impact on lenders mortgage funding costs. As has happened so often in the past, any extra costs incurred by lenders will be passed onto home-owners in the form of higher mortgage rates.

Many home-owners could experience financial hardship when rates rise.

Research released last week by the Building Societies Association, revealed 25% of all mortgage holders are likely to experience financial difficulty as interest rates rise. In the BSA survey many home-owners stated they would have to reduce costs in other areas, such as on food and utilities, in order to pay higher monthly mortgage payments.

Who could suffer the most?

At particular risk are those on a variable rate deal.

Perhaps your rate is linked to the BoE base rate or to your lender's SVR, either way when interest rates begin to rise you will experience an increase in your costs. If you want security then it could be wise to review your options and consider locking into a fixed rate.

Keeping your mortgage affordable.

If you are one of the 25% who could struggle if hit with a higher rate, what are your options to keep your mortgage costs low?

Remortgaging.

With rates still available at historic lows there are still cut price deals to be had. However how long cheap remortgage rates will remain available is hard to predict. Lenders tend to react quickly when increasing rates, so the best thing to do is make a search and switch while you still can.

For a UK wide remortgage review speak to Deal Direct.

You might think its a hassle to remortgage, or are concerned there won't be a deal on offer to save you money, however you won't know until you try.

If there is a better offer out there we can find it for you.

We make remortgaging hassle free because we do all the work for you.  

We have extensive experience and expertise in the mortgage market, and can take a look at your current offer to see how we can help you remortgage to a lower rate.

For independent advice on the best way to

protect yourself from rising rates,

call us 0800 048 8828.