(qlmbusinessnews.com Tues 12th, 2024) London, UK —
Navigating the UK Mortgage Maze Amidst Rising Rates.
As UK homeowners brace for a steady increase in mortgage rates, the journey towards securing an affordable deal grows more complex. With no budgetary respite in sight, individuals must chart their course amidst a challenging economic landscape.
The Office for Budget Responsibility (OBR) forecasts a significant climb in average mortgage rates, peaking at 4.2% by 2027, a stark contrast to the 2% figure of just over two years ago. This projection adds to the woes of homeowners and aspiring first-time buyers, exacerbated by the absence of relief measures in Chancellor Jeremy Hunt's recent budget.
Simultaneously, several lenders, including Barclays and HSBC, have hiked rates on new products or withdrawn deals, citing fluctuations in money market swap rates as a key determinant of pricing for fixed-rate deals.
In light of these developments, homeowners must be proactive in navigating the shifting landscape:
Seek Professional Advice: With rates on existing home loans surpassing 3% and new fixed-rate deals averaging above 5%, seeking expert guidance is paramount to staying informed amidst market fluctuations.
Consider Long-Term Stability: While short-term fixes offer immediate relief, locking into a longer-term fixed-rate deal may provide stability amidst uncertain economic conditions. Mortgage brokers advocate for five-year deals, highlighting competitive rates compared to shorter-term options.
Evaluate Tracker Mortgages: Base-rate tracker mortgages peg repayments to the base rate, offering flexibility amid market volatility. However, with average new two-year tracker rates at 6.15%, borrowers must weigh the benefits against potential rate fluctuations.
Assess Implications of Tax Changes: The abolition of the furnished holiday lettings (FHL) tax regime, announced in the budget, may impact holiday let owners, potentially leading to property sales and shifts in the rental market landscape.
As homeowners navigate this challenging terrain, staying informed and seeking professional advice remain crucial in securing favourable mortgage deals amidst rising rates and evolving tax policies.
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