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Renewed Interest Rate Rise Fear

The Monetary Policy Committee (MPC) is the rate-setting organisation for the Bank of England. Every three months it releases a report that tracks the progress of inflation and economic growth, with regard to the effects they will have on society in general. The latest results hint at troubled times ahead for home-owners, with the rate of inflation set to rise by an annual three percent over the next two years. This will undoubtedly set a trend for an increase in the cost of borrowing, leaving many householders struggling to make repayments. With house prices rising by an annual average of twenty percent, those wishing to move to larger properties will also be facing the likelihood of higher interest rates, given that the housing market is currently being partially supported by low interest rates. This may make moving a more difficult option for some, than previously expected.

The MPC has also warned that the current ‘bubble’ in the housing market is potentially ready to burst, leading to the house price: average earnings ratio reaching unsustainable heights. With these factors in play, the situation can begin to look unmanageable to some consumers. Aside from simply ‘burying their heads in the sand’, it can be tempting to try and use a repayment to pay off immediate debts, rather than give it to the contracted mortgage lender. This in itself can increase the ‘spiral of debt’, leading to bankruptcy and even repossession. However, many consumers are ignorant of the fact that the financial growth in property remains at an average of 10 percent per year.

This means that many existing homeowners may have more useable equity in their homes than they are aware of. Finding a mortgage broker who specialises in providing mortgages or remortgages for consumers in difficulty can help them to release those funds and combat existing debts. These mortgage brokers can find suitable mortgage products where repayments can be agreed that directly reflect the consumer’s ability to pay and, therefore, free up a considerable amount of equity at affordable rates.


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