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Bank Rates – what do you need to know?

With the Bank of England's base rate holding steady, many are questioning whether this is an opportune moment to consider remortgaging. While the base rate remains unchanged, we find ourselves amidst the highest interest rates seen in the past 15 years. For those nearing the end of their fixed-rate mortgage deals, an upward adjustment in payments is a likely scenario. However, it is a widespread misconception that the Bank of England's base rate directly dictates the mortgage rates on offer.

Mortgage rates are influenced by a variety of elements beyond the base rate. Notably, despite a static base rate, the market has experienced a gradual rise in interest rates. Paradoxically, some may have observed a slight reduction in the rates offered by mortgage lenders. This counterintuitive situation arises from the complex interplay of factors used by lenders to set mortgage rates, including 'swap rates'—a financial tool utilised by lenders to gauge future interest rates.

Lenders have, in many cases, already incorporated the effects of recent base-rate fluctuations into their pricing strategies, suggesting that the impact on forthcoming mortgage deals may be rather inconsequential.

Furthermore, the recent peak in UK inflation rates—a 41-year high at 11.1% in October 2022—has been on a subsequent decline, instilling a sense of optimism among banks and building societies that interest rates may decrease over the long haul.

Navigating the intricacies of the mortgage market, especially in a period of financial volatility, requires a nuanced understanding and vigilant monitoring of both the mortgage and broader financial sectors. For those contemplating a remortgage, seeking expert guidance tailored to individual financial circumstances can be invaluable. Our commitment is to provide bespoke assistance, comparing a broad spectrum of lenders and mortgage products to find a solution that is intricately aligned with your unique financial needs and objectives.

Please contact us to discuss pir options.

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