Beat the Interest Rate Rise

UK Quick Sale Property Company National Homebuyers suggests ways to beat the interest rate rise. Sell and Rent Back allows you to release equity in your property while remaining as a tenant.

[ClickPress, Tue Aug 08 2006] The Bank of England’s surprise decision to increase interest rates is bad news for borrowers and homeowners - but with a little financial know-how you can beat the price hikes. We show you how.

This month’s increase in interest rates – up 0.25% to 4.75% - will bring with it a sharp increase in the cost of borrowing.

Homeowners will be hardest hit – the rate rise will add an extra £20 a month to the cost of a typical £100,000 repayment mortgage.

The Bank of England’s largely unexpected decision will also affect your debts, savings and spending – and the knock-on effects could see your disposable income fall sharply. While there’s no need to panic, using the interest rate change as an opportunity to review your finances could be a good idea.

Price comparison website claims the interest rate hike could increase financial difficulties for Britons who are already suffering with rising bad debts and unemployment levels and high petrol, gas and electricity prices.

“Many consumers are managing their personal finances by means of an intricate balancing act, with demands for their income pulling it in every which way,” according to Moneyfacts spokesperson Lisa Taylor.

Why rates are rising...
The Bank’s decision to raise rates is a reaction to sharp rises in the cost of household bills and climbing house prices. Yet although the move will put the brakes on our spending power, it’s not all bad news, according to investment trust the Schroder Corporate Bond Fund.

Manager Adam Cordery points out that the rate rise is a symptom of a healthy economy and urges savers to make sure they benefit from the rate increase. “Interest rates and inflation are going up because the UK and global economies are growing strongly, not because they are weak,” he said.

“Savers should expect their bank to put up the deposit rates they are paying them now - and if your bank doesn’t you should ask them why. Move your money to a bank that does pay more when rates go up.”

With the current average house price breaking the £200,000 barrier this summer, it seems that first-time buyers will be the hardest hit of all. And property writer and broadcaster Trevor Kent is concerned about the effect the rate rise will have.

"Whilst a single lift in home buyers' monthly costs may not in itself dramatically increase hardship and repossessions, if buyers interpret this as the beginning of a trend of rises, rather than an isolated correction, then the situation could become more serious,” he said.

The Solution
For Homeowners, there is a way of releasing equity in your property that does not have the downfalls of a 'equity release' plan. National Homebuyers is the UK's largest fast property purchasing company and guarantees to make an offer on your house. They will purchase your home, allowing you to release cash tied-up in the property while remaining living there as a tenant.

The National Homebuyers 'Sell and Rent Back' solution is ideal for people who need access to cash but do not want to downsize their house, move home or get tied into any complicated schemes.

Another option, according to mortgage expert Louise Cuming, is to move your mortgage to a discounted deal.

“Any borrower paying a standard variable rate (SVR) of 6.5% really should take action to review their borrowing. They should approach their existing lender to see if they can transfer onto a more competitive rate. If that’s not possible, they should consider a remortgage to negate the effect of this base rate rise,” she says.

When the introductory offer period of your mortgage ends, the deal reverts to the standard variable rate – usually 2% above the Bank of England’s rate. Yet the best mortgage deals available are generally only 0.5% higher – which means that, even after the costs of remortgaging are taken into account, you can still make major savings.

For example, paying your lender’s 6.5% SVR on a 25-year £150,000 repayment mortgage will cost you £1024 a month. Switch to a best buy deal priced at 4.85% APR, however, and your monthly payments will fall to £874 – an annual saving of £1,800.

The two mortgage options open to you are taking out a fixed-rate deal – which guarantees how much your loan will cost over a set period of time – or going with a discount tracker mortgage. These deals are set slightly below the Bank of England base rate for a set period of time and can offer significant savings.


UK Quick Sale Property Company National Homebuyers suggests ways to beat the interest rate rise. Sell and Rent Back allows you to release equity in your property while remaining as a tenant.

Company: National Homebuyers

Contact Name: Carmel Kelly

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Contact Phone: 0870 979 8118

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