The rise in interest rates has had a detrimental effect on the livelihoods of the nation. Larger purchases, such as property, have become much further out of reach, especially for first-time buyers. However, there are ways that you can reduce the impact on your investment, especially with the assistance of Dudley based chartered accountants such as ourselves.
At Thomas Nock Martin, we support businesses and individuals in managing their finances, ensuring they stay comfortably afloat and always prepared for economic changes. With our roots dating back to 1905, we have an abundance of expertise in accountancy, allowing us to give our clients the most effective advice and guidance.
What could the rise in interest rates mean for you?
With the festive period fast approaching, the inflation in interest rates couldn’t have come at a worse time. Rates have risen to a whopping 3%, and while there are predictions that this recession will be less severe than the financial crashes in the 1980s and 2008, it is said to last over eight quarters, taking us into 2024.
With that in mind, you need to be aware of how this can affect you personally, especially as a property owner or purchaser.
For those repaying mortgages, this could make the cost of living crisis even more harmful to your financial position. Variable mortgage rates will be at risk of paying significantly higher payments – for those with the largest loans, this could mean thousands. Furthermore, those on a tracker will soon witness their payments rise to reflect the current rates.
While SVRs are determined by lenders, there is still a high chance they will go up, but hopefully with some leeway. If you’re in a fixed mortgage, you are at an advantage until your deal expires.
Property Buyers / Home Buyers
For those looking into purchase a new property or remortgage one, times will be even harder. New fixes have sky rocketed over recent years, and this is only the beginning. Although, some lenders are beginning to revisit their figures, reducing their fixed rates. This has brought the average two-year fixed rate down to 6.46% so far.
Last but not least, if it’s time to remortgage, you will likely experience the struggles that the majority of the housing market is dealing with. According to recent UK Financial data, the number of customers in mortgage arrears has fallen. But property repossession has risen to 5% compared to the previous quarter. Although with a 2-year process for repossessions, this won’t be a bank’s main priority.
What should you do next?
With the cost of living subsequently rising alongside, the coming months are going to be distressing. Consequently, it’s time to take matters into your own hands. Liaise with your lenders and work with them to find a common ground. By repaying something, it is unlikely you’ll be at risk of possession.
If buying a home is your main priority, it is strongly advised to hold off until financial pressures are reduced. But, if knowing the answer to your next step feels out of reach, seeking professional advice is your best option. Our chartered accountants have the knowledge and experience to deliver you helpful and realistic advice that can take you into 2023 in a good position.
Furthermore, if you are looking for more financial advice, check out a previous blog: What Services Do Small Businesses Require From Chartered Accountants?