If you're in the market for a mortgage or studying the topic then you may have noticed that rates have been on the rise. But why exactly are mortgage rates going up, and what does it mean for borrowers? In this blog post, we'll take a closer look at the factors that are driving up mortgage rates in the UK, and what it means for borrowers.
Learn more by watching the video and reading the blog post below:
Economic Factors
One of the main reasons that mortgage rates have risen in the UK is due to economic factors. The Bank of England (BOE) sets the base interest rate, which is the rate at which banks can borrow money from the BOE. When the BOE raises its base interest rate, it becomes more expensive for banks to borrow money, and therefore, they will pass this increase on to borrowers in the form of higher mortgage rates.
For example, if the BOE raises its base interest rate from 0.5% to 1.5%, banks will have to pay more to borrow money from the BOE. As a result, they may increase their mortgage rates from 3% to 4% to compensate for the increased cost of borrowing. This means that borrowers will have to pay more on their mortgage payments.
Inflation
Another factor that is driving up mortgage rates in the UK is inflation. Inflation is the rate at which prices for goods and services are increasing. When inflation is high, it can erode the value of money over time. To counteract this, the BOE may raise interest rates, which can make borrowing more expensive for borrowers.
Political Uncertainty
Political uncertainty in the UK, such as Brexit, can also play a role in the rise of mortgage rates. Economic uncertainty can make investors and lenders less willing to lend money, which can cause interest rates to rise.
How it affects borrowers
For borrowers, rising mortgage rates mean that it will be more expensive to borrow money to buy a home or remortgage. This can make it more difficult for borrowers to afford a home, and for those who have already taken out a mortgage, their monthly payments will be higher.
Mortgage rates in the UK have been on the rise due to a variety of factors such as economic factors, inflation, and political uncertainty. This can make it more expensive for borrowers to take out a mortgage or remortgage and can make it more difficult for them to afford a home. It is important for borrowers to keep an eye on interest rates and consider their options before taking on a mortgage.
Comentarios