This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Category: government and politics
The Bank of England (BoE) has released a financial stability report showing the current state of the financial market, indicating that millions of property owners in the UK are coming up to mortgage renewal with mixed outcomes on rates.
4.4 million people will find mortgage rates are higher than when they last renewed, while a quarter may be able to secure a lower rate.
Higher international trade barriers – possibly exacerbated by Donald Trump’s promises of raising US trade tariffs in January – were identified as a risk by the BoE’s financial policy committee, which could have a trickle-down effect on mortgages.
However, when questioned about Trump’s specific impact on the UK economy, BoE governor Andrew Bailey has emphasised that the BoE are less concerned with Trump’s warnings than they are with his actions.
A cautious approach
The BoE has warned that soaring international tensions and global growth pose imminent risks.
As such, the report has advised against any sharp, reactionary corrections in the UK financial market as they could raise credit costs. This cautious approach is in keeping with the BoE’s continued goal to keep inflation stable and not raise the Base Rate “too quickly or by too much”.
The report said:
A reduction in the degree of international policy cooperation could hinder progress by authorities in improving the resilience of the financial system and its ability to absorb future shocks.
Other findings from the report
The BoE has also studied financial stress among households and businesses, and it concluded that they have remained resilient, despite widespread price shocks and other economic difficulties in the wake of the COVID-19 pandemic.
Meanwhile, stress tests on major banks have returned positive results, showing that they could survive two crisis scenarios.
It has already been widely reported that inflation is anticipated to continue climbing in the near future.
In addition, the Base Rate is expected to be held at 4.75% when the BoE’s Monetary Policy Committee come to an agreement later in December. Further cuts are always a possibility, but another this late in the day would be a curveball.
Options for landlords
There are still plenty of low rate products readily available on the market. As such, remortgaging onto a lower rate product could save thousands for private landlords who are sitting on their standard variable rate (SVR).
Call our mortgage advisors for an in-depth look at the terrain. They will be able to discuss your options and calculate any potential savings you can achieve.
