Rise in interest rates expected
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I have been quite flattered of late as I have been approached by several journalists and news outlets for commentary around the expected rise in interest rates. I have selected a few of the more interesting snippets below:
This recent article in Bloomberg picked up a theme we have been talking about for some time, in that mortgage rates have been rising ahead of the Bank of England increasing rates as widely expected this year (even though they held off in November, but due to meet again on 16th December as they need every 6 weeks).
We were invited to take part in a feature called ‘Best Of British’ from Business Reporter. Which is aimed at highlighting some up-and-coming companies talking about topical and relevant issues. You can read our article here which looks at navigating a rising interest rate environment when looking at mortgages. Regular readers of this email will. You can see the whole setup here
Also worth noting is a less recent article that came out in May talking about house prices, which has proven to be spot on. Just saying… You can read the Mortgage Solutions article here
GDP Growth Slows Significantly
The policymakers at the Bank of England may have been feeling a little smug last week as figures from the ONS (Office for National Statistics) showed that the GDP data shows that the economic growth is cooling.
GDP was still up by 1.3% in Q3 this year, which is no bad thing, but that is in the context of a 5.5% gain in Q2 so an evident slowdown. So perhaps the BoE was justified in their wait-and-see approach after all.
Money markets were all down again last week.
If the new expectations are true, that the base rate will go to circa 1.25% by 2023, the current batch of 5 year fixed rate products look exceptional value, so we expect those to readjust in the coming weeks.
Nonetheless, our default position stands, unless you have any specific needs, we would most likely recommend a longer-term fixed rate if you have a 25% + deposit/equity, but keep it short term or flexible if less than that figure.
In the last week:
3 Month Sterling = down by 0.109 at 0.116%
2 Year SWAP = down by 0.052% at 1.119%
5 Year SWAP = down by 0.026% to 1.252%
Bank of England Base Rate = Held at 0.10%
2 Year Variable from 0.51%
2 Year Fixed Rates from 0.74%
5 Year Fixed Rates from 1.14%
BTL Rates from 0.99%
The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process at a time when we expect a rise in interest rates.
Source: Twenty7Tec November 2021