Much has been made of late of the low interest rates mortgage holders have been enjoying. It appears this could be coming to an end, though, if the latest headlines can be believed.
And the change may be coming by way of America, and the election of Donald Trump to be the next US President. That might sound unusual, but events on that side of the pond can influence what happens here. The President-elect’s plans to offer tax cuts and significant investments into America’s infrastructure could see increases to US interest rates. If – or perhaps when – that happens, there is a chance interest rates could rise here as well.
More specifically, fixed-rate mortgage deals could be first in line to see interest rate rises come into effect. Indeed, we are already seeing the first signs of this happening.
Rises on some fixed-rate deals, while others disappear altogether
Those who already have a great fixed-rate mortgage deal will be breathing a sigh of relief at the news coming to the fore this week. First, the Skipton building society decided to raise the rates on some of these mortgages. Increases of 0.37% were announced. Next came the 10-year fixed-rate mortgage from West Bromwich building society – a product charging just 2.59% interest that has now disappeared entirely.
Will other mortgage products also see rate changes?
It is too early to say, but there is a chance this will happen. First to go will be the longer-term fixed rates including the ones we have seen above. Expect the 10-year fixed products to be dealt with first, while two- and three-year ones may be fine for a while.
However, this won’t last. Indeed, we could see many rates staying the same for the remainder of 2016 to encourage more business through the doors before the New Year. After that point, we could see slight rises in interest rates attached to shorter-term mortgage products.
Is this the time to fix?
This is the time to be aware of the market and of how events in America could impact us here in the UK too. Furthermore, interest rates have gone so low this year, they are unlikely to go any lower in the foreseeable future. This means there may well be a window of opportunity to grab a good mortgage deal now while it’s still possible.
The experts may have it wrong, of course. But all eyes will be on the markets and the interest rates applied to mortgages between now and 2017. Then, we will see whether gradual rises in mortgage interest rates will take place as many have suspected they will. With the President-elect’s inauguration ceremony taking place early next year, the eyes of the world will be on America. More specifically, the eyes of the financial markets will be on events there, to ascertain whether the Federal Reserve will end up raising interest rates. If it does, it could set off a chain reaction that could lead to raises elsewhere in the world too. Watch this space.