Newspaper article The Journal (Newcastle, England)

Expert Advice on Preparing for a BOE Interest Rate Rise

Newspaper article The Journal (Newcastle, England)

Expert Advice on Preparing for a BOE Interest Rate Rise

Article excerpt

Byline: Vicky Hobson

NORTH East experts are urging homemowners to get their finances in check and prepare for a rise in interest rates now. The Bank of England (BoE) base rate has been at an historically low 0.5% for more than six years and there has been constant speculation as to when it will rise.

If you have a mortgage that tracks a rate linked to the Bank of England (BoE) base rate, your monthly mortgage payment will change to reflect any increase in rate.

Craig Armstrong, director of Low Fell Mortgage Services, in Gateshead, says: "In recent months opinion of when or if the BoE's first interest rate rise for over six years will occur has dramatically shifted. At the start of 2015 the consensus had been for the first rate rise to happen around the back end of 2015 but negative economic data pushed this back.

"Then following comments made by the BoE coupled with the latest inflation report, opinion shifted yet again toward an increase in early 2016.

"However new concerns over the slowing global economy caused by China now mean that the market currently predicts the first UK interest rate rise will not occur until the second half of 2016."

Mr Armstrong advises homeowners to speak to a mortgage adviser, get some calculations and understand the potential impact of different rate increases on your monthly mortgage payment.

Also review your household budget to see how an increase will impact your overall available income.

Mr Armstrong adds: "If you're worried, review your non-essential spending and see if there are areas where you are able to reduce your spending.

"Ask yourself the question. Is your mortgage still the best product for you, or should you consider a new fixed rate mortgage? Some clients find access to better interest rates restrictive because of their equity position.

"One way of improving the equity position, if your monthly budget allows, is to make overpayments. …

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