So why are banks increasing their standard variable rates when the Bank of England’s Interest rate is on the 3 year record low of 0.3%? It does really beggar belief, don’t you think?
The property market seemed to be getting just a little hopeful this new year and all of a sudden, it seems like it might start to take a battering again. First time buyers may get scared away from buying homes again causing chains to start to fall apart again and then the market gets stagnant…again. People are trapped in their homes and just will not be able to shift it any time soon.
What of if you are on some variable rate with your bank then how does this affect you? Needless to say, you might find that your payments go up by about £30 on a £100k mortgage a month. When money is stretched and times are hard, having to pay out an extra £30 may make or break you. No, none of this is fair.
I have heard it mentioned that the cost of funds used by the banks are increasing and so therefore the customer must pick up the shortfall as the bank, of course, does not want to reduce its profits. The government bail them out with taxpayer money, they refuse to lend to taxpayers and now they increase rates as well. Definitely not fair.
What can you do about it? Well, make sure you are on the best mortgage for you, speak to a mortgage broker to be certain. It may also be worth you tying up your mortgage in a fixed rate if you can. The less money you need to borrow against the value of your house, the more options are available to you.
So do not keep your head under water, have a look around and see if you can move your mortgage to prevent the upcoming rate rise from the Halifax from the 1st May, 2012.