rising rates
With the Bank of England expected to rising rates interest again next month. Borrowers are rushing to take out longer-term fixes to ride out interest-rate volatility. But Governor Andrew Bailey said this week that ultra-low interest rates will return again once the impact of Covid and the war in Ukraine fade. Suggesting a long fixed rate may not be essential.

As inflation hit 9.4 per cent in June, well above the Bank’s 2 per cent target, aggressive rate rises may be needed in coming months to bring this back down. But Mr Bailey said that the there is no reason to think that the global forces which have brought interest rates to record lows have gone away or that interest rates would be forced up on a permanent basis.

Interest rates have risen from 0.1 per cent in December to 1.25 per cent in response to the surge in post-pandemic demand and the war in Ukraine. Which has pushed up oil prices and increased the cost of gas, food and imported goods. But the ‘low global equilibrium’ the Governor mentions means that higher rates could be short lived. Suggesting that shorter fixes may be enough to ride out interest rate volatility. Swap rates, on which fixed-rate mortgages are partly based, have also fallen over the past month.

While shorter-term fixed-rate mortgages may still appeal to some borrowers, there is a risk element involved so they won’t suit everyone. But with many forecasters predicting a recession, which usually leads to lower interest rates as they are reduced to boost the economy. A long-term fixed rate of 10 years or more may not be necessary.

Get in touch

Independent advice is more important than ever. A whole-of-market broker such as AWS Private Finance is the best place to start. We look at all the deals on the market to find the right one for your particular circumstances. And can advise on the length of fix most suitable for your particular circumstances.

We have plenty of experience in arranging contractor mortgages and professional mortgages, knowing which lenders offer the most favorable terms. AWS Mortgages also know which lenders currently have service issues.  Which ones to go to if you need to get a mortgage approved relatively quickly. Particularly if you are competing to buy property and need to move fast. Get in touch for more information.