The Bank of England has raised interest rates to their highest level since April 2008, in an effort to cool the UK's rising inflation. This is likely to have a significant impact on homeowners in South London, who are already facing rising property prices and rents.
The impact of higher interest rates will vary depending on individual circumstances. However, in general, homeowners with variable rate mortgages will see their monthly payments increase. This could put a strain on household budgets, particularly for those who are already struggling to make ends meet.
Homeowners with fixed rate mortgages will not see their monthly payments increase immediately. However, they will be locked into their current interest rate for the duration of their mortgage term. If interest rates continue to rise, this could mean that they will be beating the rate that variable rate customers are paying - but for how long? When they come off their fixed rate, and many are going to do just this in the next 12 months - they will be in for a trebling of their mortgage payments!
The rise in interest rates is having a negative impact on the housing market. It is already leading to a slowdown in house price growth, as buyers become more cautious about making large purchases. It is making it more difficult for first-time buyers to get onto the property ladder.
For homeowners in South London, the rise in interest rates is a double whammy. Not only are they facing higher mortgage payments, but they are also likely to see their property value decrease. This could make it difficult for them to sell their home if they need to move. Or at least, at a price they had in mind (last year's price)!
There are a number of things that homeowners can do to protect themselves from the impact of higher interest rates. These include:
- Reducing their monthly outgoings: This could involve cutting back on unnecessary spending or increasing their income.
- Refinancing their mortgage: This could involve switching to a fixed rate mortgage, which would protect them from future interest rate rises.
- Building up an emergency fund: This would give them a buffer to fall back on if they experience financial difficulties.
- The rise in interest rates is a challenging time for homeowners. However, by taking steps to protect themselves, they can minimize the impact on their finances.
In addition to the points mentioned above, here are some other things that homeowners in South London can do to prepare for higher interest rates:
- Get a professional valuation: This will give you an idea of how much your property is worth, which will be important if you need to sell in the future.
- Keep an eye on the market: Monitor property prices and interest rates so that you can make informed decisions about your finances.
- Talk to your mortgage lender: If you are struggling to make your mortgage payments, talk to your lender as soon as possible. They may be able to offer you some help or advice.
Are you interested in the value of your property? If you are curious as to what your rental property is worth today why not drop me a line and pick my brains or use my free online valuation tool to get a ballpark figure!