There seems to be no question in the minds of economists that mortgage interest rates in the U.K. will go up eventually; the questions of when and how much are the ones they’re arguing about. The Bank of England’s base rate has been so low for so long that many homeowners are taking it for granted, according to Karen Barrett of unbiased.co.uk, an independent financial advice website. She suggested that many are going to find themselves struggling to make their mortgage payments when the inevitable increases hit them.
According to Barrett, there are millions of people who expect to get a fixed rate of around 3.3 %, which she says is unrealistic because the best rate right now for a three-year fixed loan is more like 5.1%. Borrowers who are sticking with their current lender’s standard variable rate package are going to be dismayed when their payments, which are tied to the base interest rate, start going up.
Though many economists think rates will stay the same for at least the next couple of months, many financial experts are advising everyone with a variable rate loan to start shopping around now for the best fixed rate available, so they won’t be caught short in the coming year.