Interest rates set to rise in March
Financial analysts are predicting that the signs of an economic recovery and rising inflation could force the Bank of England’s Monetary Policy Committee (MPC) to consider raising interest rates ahead of schedule. This increase in interest rates looks set to begin in March and although the shift will be gradual, it will have a noticeable impact on the UK’s borrowers. Figures for economic growth which are due to be released at the end of January are predicted to confirm the green shoots of fiscal recovery and highlight a dramatic rise in inflation. Economic policy, although remaining flexible enough to support this recovery as much as possible, should do what it can to ensure that the UK meets the inflation target and the emergency bank rates could well hamper this effort.
A rise in interest rates throughout early 2010 was first predicted in September last year but there are other schools of thought surrounding the timeframe for economic recovery. Of particular interest is the opinion of the Royal Bank of Scotland, which was one of the most heavily effected lenders during the recession. In a statement, a representative of RBH stated that they expected bank rates to remain at the 0.5% emergency level for much of 2010. The real benefit of this would be to those homeowners who have a tracker mortgage and can use the low rate of interest to pay off as much of their mortgage as possible. After all, mortgage payments are likely to be your highest monthly expenditure and keeping a roof over your head one of your highest priorities.
Consolidating your unsecured debts into a single monthly payment can be an excellent way of easing the pressure of mounting debt. Remortgaging can be a suitable way to facilitate this, allowing you to release some of the equity in your home to service outstanding debt. You can remortgage by switching your existing mortgage to a different policy. With interest rates forecast to rise, those homeowners with a tracker mortgage, that have been reaping the benefits of the 0.5% emergency rate of interest, are in the best position to switch to a new lender. The process of shopping around can be a difficult, time consuming process and one which is fraught with potential pitfalls, so it is essential that you seek expert advice about your remortgage and be sure that your new mortgage is affordable to you.