Posts Tagged ‘interest rates’


Could you cope with the interest rate increase?

Monday, January 17th, 2011

For nearly two years many homeowners on variable rate mortgages have revelled in the fact that the base interest rate has fallen to an all time low, having dropped to just 0.5 percent in the first quarter of 2008. The drop in the base rate meant that many people saw their monthly repayments plunge, leaving them with more disposable income and enabling them to dodge the risk of losing their property through being unable to meet their repayments.

Over the past couple of years people have used the extra money that they have saved on their repayments for a variety of things, from bumping up their savings or paying off debts and mortgage balances to treating themselves to some luxuries. However, nobody knows how long this low rate of interest will last, and some are speculating that it could come to an end in the near future, with many predicting that interest rates will increase this year.

This leaves consumers in a difficult position. On one hand they the interest rate could stay at this record low for some time to come, enabling the average homeowners to enjoy having more money and make plans for using the money to maximum effect. On the other hand the fact that interest rates could suddenly increase means that consumers have to be prepared and need to ensure that they will be able to afford the repayments.

The problem comes for those with fairly hefty mortgages, as even a relatively small increase in interest rates could make a difference of hundreds of pounds a month, which many may find difficult to get their hands on. This could quickly lead to missed repayments, and ultimately to repossession.

One solution for homeowners who do not feel that they would be able to cope with an interest rate increase would be do look at switching to a fixed rate mortgages, where the interest rate and repayments would remain fixed for a specified period of time, enabling homeowners to enjoy increased peace of mind and stability with their finances. However, this does mean that as long as the base rate stays at this low you will usually be paying more than those on variable rate mortgages.

With an interest rate increase likely over the coming months, based on predictions from industry experts, it is well worth thinking about whether you could cope with a rate rise should it take place, and if not look at the various options open to you.

Tags: maximum, fact, interest rates, increase, Picture Ratings, hefty mortgages, peace

Panic could mean many fix their mortgage rates

Monday, August 30th, 2010

Recent predictions from industry officials have sparked concerns amongst many homeowners over their future repayments, with one official claiming that the base rate could rocket from its current all time low of just 0.5 percent to a shopping 8 percent over the next couple of years, which could push mortgage interest rates up to 11 or 12 percent.

For many homeowners this would put them in financial dire straits, adding hundreds of pounds a month to their mortgages and putting them at risk of losing their homes altogether if they cannot find the extra money to make these higher monthly repayments.

It is now thought that these claims and predictions over the base rate increasing could result in people flocking to fix their interest rate before the base rate does go up, although nobody knows when this will be. Some experts have said that the recent reports and predictions are simply scaremongering, and have warned consumers not to rush into taking measures that may prove unnecessary.

However, others are warning consumers to look into the options available to them, as although the base rate may not go up yet it will go up at some point, and consumers need to have a good idea of what their options are if and when this happens. For those that would struggle to maintain repayments on their mortgages if the cost went up each month this is particularly important.

One financial industry official said: ‘If borrowers know they would struggle if rates started to jump, it is important to look at ways of preventing mortgage payments shooting up.’

Tags: Mortgage loan, mortgage, interest rates, finance

Average fixed mortgage rates fall to seven year low

Monday, June 21st, 2010

The average rate of interest on a two year fixed rate mortgage has fallen to its lowest level in seven years, according to market data. Reports have shown that the average rate of interest charged on a two year fixed rate mortgage has now fallen to just 4.52 percent, which is the lowest it has been since September of 2003 when it fell to just 4.51 percent.

With lenders trying to get consumers off variable rate mortgage deals many have been dropping their fixed rate mortgages since 2009, and this has seen the average rate on these fixed mortgages continue to fall steadily. Officials said that many consumers are on standard variable rate mortgages at record low levels, and lenders want to try and get them onto fixed rate deals by dropping the rates to make the deals seem more tempting.

Industry experts have said that homeowners are now increasingly staying on standard variable rate mortgages with low rates of interest rather than switching to higher rate fixed rate deals, and this is something that lenders are determined to address. The urgency for lenders has been further increased by the fact that the base rate has now been at a record low of just 0.5 percent for well over a year now.

One finance expert said: “Many borrowers are opting to remain on record low SVRs and overpaying their mortgage rather than secure a new deal at a higher rate. Lenders are trying to incentivise borrowers onto new fixed rate deals by making significant cuts to rates. A fifth of lenders have moved to increase their SVR since bank rate was kept on hold after finding their previous level unsustainable. Competition for a limited amount of mortgage business continues to increase amongst lenders, who are once again actively competing to be top of best buy tables. Previously, only deals for borrowers with large deposits were seeing cuts, but as the market improves borrowers with smaller deposits are being offered more competitive deals. The platform has been set for the mortgage market to return to some sort of normality, while still applying the lessons learnt over the last few years.”

Tags: finance, mortgage, Fixed rate mortgage, interest rates, Mortgage loan

Make sure you don’t get a raw deal on your bank loan

Tuesday, May 11th, 2010

In the current financial climate most people are keen to keep their debts down, but for many people the need to borrow money is inevitable due to their circumstances. Those that do need to take out loans and other forms of finance need to ensure that they are not paying over the odds on their borrowing, which could prove difficult because the banks want to try and charge over the odds.

Following the most recent Monetary Policy Committee meeting it was decided that the base interest rate would remain at its all time low level of just 0.5 percent. The base rate has been at this record low since March of last year, and for many people this automatically leads them to believe that because the base interest rate is low the cost of borrowing must be low.

However, this is not the case, and according to reports UK banks have actually been slyly increasing the rate of interest on loans and borrowing, resulting in those that have to take out credit having to pay more. The misconception that a low base rate means low borrowing rates is a dangerous one for borrowers to have, as they may then drop their guard when it comes to checking and comparing the cost of borrowing.

Officials believe that all that has happened as a result of the base rate falling to such a low rate is that the margin between the base rate and the rate that banks are charging has widened to astonishing levels, and whilst consumers are suffering because of this the banks are actually reaping in the money, enabling them to shore up their finances following the chaos caused by the financial meltdown. It is thought that the banks could be making millions of pounds through these sly increases.

With this in mind consumers that are looking to take out a loan or other form of credit from a bank should make sure that they check the details of the loan agreement carefully to ensure that there are no hidden charges and fees that have been slyly added by the lender. It is also important to ensure that you compare the interest rates on similar loans from a number of lenders so that you can find the most competitive loan, as the interest rates charged can vary from one loan product and provider to another.

Tags: interest rates, Bank, finance, loan product

Homeowners pay small fortune for security of fixed rate mortgages

Tuesday, April 27th, 2010

Recently released figures have suggested that many homeowners in the UK are paying a small fortune each year for the security of taking out a fixed rate mortgage. Homeowners that are opting for a fixed rate mortgages are paying around £850 a year more for the security of having this type of mortgage according to industry reports.

There are a number of options available for those that want to take out a fixed rate mortgages, such as two, three, and five year fixed rate deals. The longer the fixed period of the mortgage the more the borrower pays in terms of interest. With the fixed rate deal borrowers enjoy more financial stability as they know exactly what their repayments and interest rates will be for a specified period no matter what happens with the base interest rate.

The nature of fixed rate deals offer peace of mind for many homeowners, especially first time buyers who want some financial stability to get them used to budgeting. However, for those that go for the longer fixed term deals the financial penalties can be huge, leaving them to pay far more interest on the loan, which costs them hundreds of pounds a year.

The interest rates on shorter term fixed rate loans have come down to some degree due to the high level of competition amongst lenders to provide the best fixed rate deals. However, longer term fixed rate deals can be much more expensive, with figures showing that borrowers will pay more than 1 percent more for a three or five year fix compared to a two year one.

One mortgage broker said: ‘whether you think it is a good idea to fix for longer depends on what you think will happen to Bank of England base rate and if you need that reassurance of knowing what your repayments will be. If your situation is likely to change a lot over that period, then it is worth seriously considering if you want to be locked in for that long.’

Those that do want the peace of mind that a fixed rate mortgage can provide are advised to shop around to ensure that they are able to get the best deal possible, as many lenders are now offering fixed rate mortgages but the costs involved can vary relatively widely making a big difference to monthly repayments and overall interest paid.

Tags: finance, Fixed rate mortgage, interest rates, mortgage

Sharp fall in popularity of fixed rate mortgages

Monday, April 19th, 2010

In the past many people that were buying homes opted for a fixed rate mortgage because of the increased peace of mind that these mortgages provided. Whilst the interest rates charged on fixed rate mortgages were slightly higher than on variable rates these loan types gave the borrower increased financial stability and peace of mind.

With the fixed rate mortgage homebuyers were able to relax in the knowledge that for a set period of time their mortgage interest rate, and therefore their monthly mortgage repayments, would not change even if there were changes to the UK base rate. Whilst this also meant that the rate and repayment could not fall most buyers were happy knowing that it would not go up.

However, due to existing market conditions it seems that the popularity of fixed rate mortgages has declined, with a sharp fall reported in the popularity and take up of these mortgages. For over a year now the base interest rate has stood at its lowest level in the history of the Bank of England, at just 0.5 percent. With this in mind many have decided that it is no longer viable to opt for fixed rate deals.

One mortgage broker, Ray Boulger, said that today’s fixed rate deals were more expensive than they were a year ago despite the lower base rate. He also said that the percentage of clients at his firm that were taking out fixed rate mortgages had plummeted from a healthy 80 percent to a paltry 20 percent, with many realising that tracker products were the best bet at the moment.

Mr Boulger stated: “I think you will see the proportion of fixed-rates continuing to fall on the CML reports for at least the next two or three months.”

Tags: interest rates, fixed rate, mortgages, mortgage

Many borrowers turning to high interest sub-prime credit cards

Sunday, April 4th, 2010

There are concerns that many borrowers in the UK are now turning to sub-prime credit cards that charge astonishing rates of interest because they are unable to get finance through more traditional routes. According to a recent report around one million people that have been desperate to get finance but have been turned away by traditional lenders have turned to these credit cards, some of which are charging rates of interest that are as high as 60 percent.

One firm that offers credit cards for those with damaged credit ratings is Provident Financial, which offers the Vanquis credit card. The company claims that it has been receiving a massive 2700 applications a day for its credit card, which charges some consumers an astonishing rate of interest based on their credit rating and risk. With so many people getting turned down for credit, and others having their credit limits slashed or their accounts closed, firms like Provident are enjoying a roaring trade.

Provident now has over four hundred thousand borrowers on its books, although officials from the company said that it had also had to turn down well over three quarter of a million applications from desperate applicants. The figures from Provident have raised concerns that more and more people could be forced into finding finance from companies such as door step lenders where the rates of interest charges are extortionate.

An official from the debt charity, Credit Action, said: ‘These people are not being served by the high street banks and it just goes to show the appetite that there still is out there for credit. The rates on these cards are very high if you cannot manage your debts. The fear is that while some of these people will hopefully have been put off, many will have to turn to doorstep lenders or pay day loans companies which can charge exceptionally high amounts.’

Tags: credit history, finance, interest rates, credit, Credit card

Continued popularity for variable rate mortgages

Monday, February 15th, 2010

Whilst there was a time when people wanted to avoid variable rate mortgages because of the high rate of interest attached to them many people at the moment are finding that these are the most cost effective mortgage types to opt for because of the record low interest rate that is still in place. (more…)

Tags: Banking, Floating interest rate, interest rates, mortgage, Fixed rate mortgage, Variable-rate mortgage, John Charcol, Personal finance, Interest

Reductions being seen in personal loan rates

Tuesday, February 9th, 2010

It has been reported that finally the rates charged on personal loans rates may be starting to fall. For many this will have been a long time in coming, given that the base interest rate in the UK has been at an all time low of just 0.5 percent since last March. (more…)

Tags: Personal finance, personal loans, interest rates, loans, payday loan, credit, Interest

Up To 4 Percent Increase In House Prices Says CEBR

Friday, January 15th, 2010

It has been forecast by the Centre for Economic and Business Research that house price increases next year will start to moderate and stabilise after a series of increases over recent months. (more…)

Tags: bank of england, Centre for Economic and Business Research, mortgage, interest rates, Personal finance

Homeowners better off due to low interest rates

Wednesday, December 30th, 2009

Just eighteen months ago many homeowners in the UK were facing crippling mortgage repayments because of the high base interest rate, and many found that they were unable to keep on top of these repayments fuelling a surge in property repossessions across the UK. (more…)

Tags: bank of england, homeowner wealth, interest rates

Mortgage lending in October increased compared to previous month

Monday, December 14th, 2009

Figures that were recently released by the Council of Mortgage Lenders have shown that there was a month on month increase in mortgage lending for the month of October, with mortgage lending for the month rising by around 5 percent compared to September. (more…)

Tags: mortgage, interest rates, Financial economics, bank of england, economist

One hundred thousand homeowners a month benefit from low interest rates

Saturday, October 31st, 2009

According to a recent report around one hundred thousand homeowners every month are benefiting from the rock bottom base rate, which has stood at just 0.5 percent since April of this year. The current base rate is the lowest it has ever been in the history of the Bank of England, which spans over three hundred years. (more…)

Tags: low mortgage rates, interest rates

Mortgage repayment savings being used to pay off credit card debt

Thursday, October 22nd, 2009

It has been reported recently that many homeowners in the UK are using the savings that they are making on their mortgage repayments to make repayments on their credit card debts. (more…)

Tags: credit card debt, mortgage repayments, interest rates

Economist warns on interest rate increases in 2010

Wednesday, September 30th, 2009

Since April of this year the base interest rate has been at its lowest rate in the history of the Bank of England, which spans over three hundred years, and currently stands at just 0.5 percent. (more…)

Tags: interest rates, bank of england

No change to interest rates for September

Tuesday, September 22nd, 2009

With the September Monetary Policy Committee meeting having been held last week the Bank of England has announced that there is to be no change in the current base interest rate, which will remain at its record low of just 0.5 percent for yet another month. (more…)

Tags: interest rates, mortgages, bank of england

Banks increase profits through increasing loan rates

Wednesday, July 29th, 2009

A recent report has suggested that banks in the UK are slyly trying to make more money from customers by increasing their personal loan rates, which some campaigners have described as being underhand. (more…)

Tags: interest rates, loan rates, loans

Another hold on the base interest rate

Tuesday, July 21st, 2009

Earlier this week the Monetary Policy Committee met up for the July monthly meeting with regards to reviewing the base interest rate. (more…)

Tags: base rate, bank of england, interest rates

Base rate will remain low into next year

Monday, July 20th, 2009

Over the past eight months a series of base rate cuts by the Bank of England have seen the base interest rate plummet to its lowest level in the three hundred and fifteen year history of the Bank of England, standing at just 0.5 percent. According to recent reports many industry experts are now expecting the base interest rate to remain at this historic low level well into the course of next year. (more…)

Tags: mortgages, interest rates, base

Deals still available even though loan rates have risen

Saturday, June 13th, 2009

According to a recent report whilst loan rates in the UK may have increased recently there are still some decent deals available for a number of consumers. (more…)

Tags: loan deals, loans, interest rates, loan rates

Is it a Good Idea to Lock in Your Mortgage at the Lower Rates Now Available?

Tuesday, May 26th, 2009

The interest rates for mortgages in the UK are at the lowest level they have been in 300 years. Many homeowners are wondering if they should lock in their mortgage at these lower rates in an attempt to save money on their mortgage payments. (more…)

Tags: fixed rate mortgages, base rate, mortgages, lock mortgage rates, variable rate mortgages, interest rates

More money to be ploughed into the economy

Friday, May 22nd, 2009

After the recent Monetary Policy Committee meeting earlier this month the Bank of England announced that the base interest rate was to be left on hold at 0.5 percent. (more…)

Tags: economy, base rate, interest rates

CML wants lower cap on mortgage interest rate reduction

Friday, March 6th, 2009

The Council of Mortgage Lenders has asked for a lower cap to be introduced, which would mean that mortgage lenders would not be expected to reduce their mortgage interest rates beyond a certain level. (more…)

Tags: Homeowner Mortgage Support Scheme, interest rates, council of mortgage lenders, CML

Record low for UK interest rates

Sunday, January 18th, 2009

Following the recent Monetary Policy Committee meeting held last week the Bank of England has announced that the UK base interest rate has been cut yet again, falling by 0.5 percent from 2 percent to just 1.5 percent. (more…)

Tags: bank of england, interest rates

Loan rates have rocketed

Monday, December 22nd, 2008

Consumers are being warned that over the past few months the interest rates charges on personal loans have rocketed, and rates are now well over double the official base rate of 2 percent, with more than a 5 percent margin between the base rate and the average rate of interest charged on these loans. In just a couple of months the gap between the rates charges on loans and the base rate has widened considerably, leaving consumers paying way over the odds on some personal loans. (more…)

Tags: interest rates

Some mortgage lenders making money from base rate cuts

Friday, November 14th, 2008

Between last December and April of this year the base rate was cut three times, each time by 0.25%. In a surprise move earlier this month, a day ahead of the October Monetary Policy Committee meeting, the Bank of England cut the base rate by a further 0.5% taking it to 4.5%. it was hoped that the rate cut would help to boost consumer confidence and the economy, and would ease financial pressures that were facing many households. (more…)

Tags: interest rates

Brits being hit with rocketing loan interest rates

Wednesday, November 12th, 2008

Since the onset of the global credit crunch consumers in the UK have been affected in many ways, with the cost of borrowing rocketing and with availability of finance in all sectors becoming more restricted and difficult. Many consumers have found that whilst they were able to get finance with relative ease a year or so ago, these days getting a loan or other form of finance is not so easy. Also, many have found that the cost of taking out a loan or other form of finance has gone up. (more…)

Tags: personal loans, interest rates

Nationwide passes on some of interest rate cut

Tuesday, November 11th, 2008

According to recent report the Nationwide Building Society is planning to pass on part of the latest base rate cut, although it will not be passing on the full rate cut to borrowers. Officials state that as of the start of November Nationwide will be reducing the interest rates on its standard variable rate mortgages by a third of a percent, taking the rate from 6.49% to 6.19%. (more…)

Tags: interest rates, nationwide

Lending from banks becomes even tighter

Friday, November 7th, 2008

According to a recent report lending amongst UK banks is getting even more difficult, and many of the banks and building societies in the UK are set to cut their lending level even more than they have over the past year, since the onset of the global credit crunch. This data comes from a report from the Bank of England. The report also claims that the fall in new mortgages over the past three months had been bigger than expected. (more…)

Tags: bank of england, interest rates

Banks cut mortgage rates after surprise announcement

Tuesday, October 21st, 2008

Earlier this week the Prime Minister, Gordon Brown, and the Chancellor of the Exchequer, Alistair Darling, announced that the UK base rate was being cut by 0.5% from 5% to 4.5% in a surprise move one day ahead of the Monetary Policy Committee meeting. Other central banks around the globe, including the US Federal Reserve and the European Central Bank, also cut their base rates by 0.5% in a bid to try and stabilise the financial markets, boost the economy, and restore consumer confidence. (more…)

Tags: interest rates, bank of england, mortgage rates

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