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If you have had a mortgage come up for renewal during the last few years of fluctuating interest rates, you’ll know the pain of seeing your repayments rise all too well.
It is a good time to ask the question. Later this week, the Bank of England’s Monetary Policy Committee (MPC) will meet to decide what to do about interest rates. For anyone with a mortgage, credit card or loan, plus people who would like to buy a home for the first time, what happens next to the cost of borrowing matters.
The Bank’s current rate is 4.5 per cent and it is expected to stay there as inflation – the rate at which prices and the cost of services rise – is back on the up. This time, that’s primarily because of higher energy prices, water bills and bus fares.
If you were on a fixed-rate mortgage of 1, 1.5 or, say, 2 per cent and you now find yourself looking at rates which are double that, you might be wondering where the hundreds of pounds extra you are charged per month actually end up.
Andrew Montlake, a mortgage and finance expert with more than 30 years of experience, points out that “we want them to be profitable too – remember what happened in 2008″.
square MONEY CLINIC Money ClinicAs mortgage interest is so high, is it still worth getting on the property ladder?
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Their costs might go up because of global factors as well as issues closer to home like the cost of labour and running a business.
Some banks and lenders borrow money from investors in order to lend people money to buy homes. This process is governed by swap rates, which are also influenced by the Bank’s rate.
However, Montlake notes that some lenders – such as high street banks – will “borrow money from either their own savers [for mortgage lending], so it’ll be affected by the savings rates, and if interest rates are higher for longer, then that means that mortgage rates have to be higher because they have to offer higher rates to savers and then lend it out at a certain level”.
“The main thing at the moment is uncertainty around what will happen next,” he explains. “We’ve been in a very volatile environment where you’ve had a pandemic, war in Ukraine and now the complete variable of Donald Trump.”
Montlake thinks it is unlikely that we will see much lower rates any time soon because of the external pressures already discussed.
Mortgage-backed securities – where mortgages are bought and sold on the open financial markets for profit – are far less common than they used to be.
“Lenders will tell you that they don’t make the margins they used to make on mortgage lending, though, as a result. Tiny violins at the ready, I know.”
Speaking of Trump, I thought it would be worth spotlighting an interesting housing intervention from his new administration.
There is often a preoccupation with “beauty” on the political right. You may remember that under the previous Conservative government in the UK, all new buildings were required to be “beautiful”, too. This was generally interpreted as being mock-Georgian or neoclassical like King Charles’s pet project, the Poundbury Estate.
Once in power, Labour scrapped the Tories’ rule that new developments needed to be “beautiful”, arguing that it “blocked” new buildings.
Beauty, as the saying goes, is in the eye of the beholder so why do some politicians interpret all that is beautiful as being reminiscent of “classical architectural heritage” like that of Ancient Rome and Greece?
Are there any buildings you think are “beautiful”? Or any that you don’t? I’d love to hear from you vicky.spratt@inews.co.uk
Ask me anything
In this instance, I would draw your attention to the Tenant Fees Act 2019.
However, this does not negate tenants’ responsibility for cleaning a home before they leave. They will still be responsible for ensuring it is returned to the landlord in the same condition as when they moved in.
So, to sum up: no, you cannot require your tenants to pay for professional cleaning. Yes, you can require them to leave the home as they found it, minus standard “wear and tear”.
Vicky’s pick
Last week, I was lucky enough to be a guest of the Longford Trust at a performance of Punch, a play at the Young Vic in London.
Punch is a play, based on a true story, about a young man who punches another young man on a night out. The victim suffers a brain bleed days later and dies. The perpetrator is sent to prison where he goes on a journey of owning his behaviour and, ultimately, embarking on rehabilitation.
I still don’t have the answer to that question but I would encourage you to see the play.
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