Breaking News: Bank Rate Held at 3.75% Why This Needn’t Affect Your Moving Plans This Year
This time last year, it looked like the bank rate, and so the cost of mortgages, was on the fast train back to cheap money lending. But first, the inflation rate, a key factor when setting the bank rate, decided it wasn’t going to join the party.
Then Donald Trump’s Iran war sent everything veering off into the sidings, and the Bank decided to hold the rate again.
At the end of the day, though, it’s best not to get too hung up on what the Bank of England does. It isn’t the be-all and end-all when it comes to buying or selling a home.
Look at the actual cost of borrowing money.
Because the bank rate set by the Bank of England isn’t the same as the rate you pay on a mortgage.
Mortgage lenders use a full range of factors to set their mortgage interest rates. Swap rates, the rates banks charge each other for borrowing, are a key factor in setting fixed mortgage rates.
Lately, many lenders have hiked their mortgage rates even as the bank rate has remained unchanged. Now they are starting to pare them back.
Barclays, HSBC, Halifax, Santander, TSB and NatWest all reduced rates over the last week or so.
So oddly, mortgage rates are slightly cheaper in any case.
It’s important to take a long-term view, too.
Because this year’s bank rate decisions don’t determine the cost of a mortgage over the 20 or 25 years it takes to repay it.
So, what really does matter when it comes to mortgages?
Affordability.
In the real world, most people look at their monthly mortgage repayment.
They don’t look at what the bank rate is doing. (Though we recommend you do.)
If you’re buying, and this applies to homebuyers and landlords alike, buy what works for you with a mortgage that’s going to be affordable for you.
Take expert advice. (This isn’t financial advice by the way). Find a deal that works for you and your budget.
It’s just the same for sellers – whether you’re selling your own home or a rental.
Especially if today’s announcement has made you reconsider your plans.
If mortgages are affordable for buyers – and your property is correctly priced and well presented – there’s every chance someone will want to buy it regardless of bank rate.
So, really, don’t stress out over the Bank of England’s decision.
If you want to move and the numbers add up for you, it makes no sense to hang around.
The 2.25 you’re waiting for might never come.
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