As we look towards the end of this decade, the Office for Budget Responsibility (OBR) projects a shift in the Bank of England's base interest rate, anticipating a decrease to around 3.5% by 2030. This projection is a slight adjustment from earlier forecasts, which anticipated a drop to 3%.
Understanding the Impact on Mortgage Rates
Despite these projections, fixed mortgage rates may not necessarily increase significantly in the near future. The market has already adjusted to these expectations, suggesting that much of this forecast has been priced into current rates. For homeowners approaching a remortgage, it's essential to prepare for potential increases in monthly payments, as the average interest rates on existing mortgages are expected to rise to 4.5% by 2027.
Strategic Considerations for Mortgage Holders
For those with fixed-rate mortgages due up for renewal, it’s critical to start planning for these adjustments. Approximately two-thirds of fixed-rate mortgage holders have remortgaged since the uptick in rates began, leaving about a third facing adjustments between now and 2026.
Proactive Steps for Future Stability
To hedge against potential rate increases, homeowners might consider locking in a rate up to six months before their current mortgage expires. This approach offers a safeguard if rates climb further. Conversely, if rates fall, there may be opportunities to secure more favourable terms elsewhere.
Final Thoughts
Navigating the mortgage landscape requires careful consideration and proactive planning, especially with the anticipated fluctuations in interest rates. As always, staying informed and seeking professional financial advice can help you make the best decisions for your financial future. Contact Cleveden Park Wealth today to speak with one of our experts!
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