23 Jan 2017
With President Donald Trump vowing to put "America first", experts are forecasting that mortgage rates could start rising. In this article, our Financial Services Director Allan Gardner explains why and outlines what you can do to protect your pocket.
After months of noise, accusations and scandal, Donald Trump has taken his seat in the Oval Office at the 45th President of the United States of America.
Even now, it seems surreal – but it is reality and we now need to adjust to what this means for the global economy.
Some may have seen recent reports speculating on the fact that Trump’s presidency might push up UK Mortgage interest rates.
Regrettably, this one appears to have more fact than fiction about it.
An election win built on promises of an improved US Infrastructure and building of roads, airports, tunnels, railways and the occasional wall down Mexico way means there is a high probability that the Federal Reserve will need to increase interest rates.
And the old saying that when the USA sneezes we usually catch the cold stands true – meaning that if US rates go up, then the UK will most likely follow.
In addition to this, we have seen swap rates - which usually influence mortgage rates - rise sharply since August and the cost of five year money has more than doubled from 0.43% in August to 0.90% in November.
Nevertheless, the cost of five year fixed rates is still relatively low and according to the Council of Mortgage Lenders, home loan affordability has hit a historic low for both home movers and first time buyers.
Therefore, the market is still seen as being cheap for anyone looking to buy a property or secure a new rates as their current deal comes to an end.
The average five year fixed rate is below 3% for the first time ever and whilst it might not stay like that for too long it’s still a great time to lock into medium term fixed rate deals in the knowledge they probably won’t go any lower in the short term.
So my advice is this: now is the time for any borrower to really look at what they are paying for their mortgage and consider if they would be better off restructuring their mortgage to capitalise on longer term fixed rates or even look at two year deals which are running at below 2%.
It amazes me how people will shop around for hours on end to save money on the likes of a TV, but ignore the fact they could save money every month by looking at all the options available to them through an independent mortgage adviser.
Most lenders will keep a mortgage offer open for three months so it gives you plenty of time to get things sorted before your old deal comes to an end if you act quickly and take proper independent advice on what is best for you .
So don’t let The Donald’s infrastructure promises end up costing you more – get independent advice on your new mortgage whether you are moving house, buying your first home or just need to look at your current deal.
If you would like to speak to one of our advisers about arranging a remortgage, call 0333 0044 333 or click here.