UK Election Analysis: June signals the beginning of the end for May – is now the time to seek ‘Strength and Stability’?
Posted on 9 June 2017 by
The uncertainty created by the election result will be unhelpful for both sterling and the economy in general, but it is more difficult to know what effect it will have on interest rates. Although the current 0.25% Bank Rate is close to the floor, and gilt yields are near all-time lows, if businesses reduce investment The Bank of England might consider it necessary to provide more stimulus.
On the other hand whether the new Government, in whatever shape or form it may come in, lasts a few months or the full five years, markets will factor in the increased risk of future uncertainty and the increase in gilt yields that would likely follow. Therefore, as mortgage rates are around all-time lows with very limited scope for further falls, there is the possibility that we are facing an increased risk of higher rates.
Our conclusion is that the rationale for many people to choose a medium to long term fixed rate mortgage deal just got more compelling.
A five or even a ten year fixed rate deal will take you through the uncertainty of a possible unstable coalition government and protracted Brexit negotiation to the other side of whatever life post-membership of the European Union looks like. In uncertain times, if you’re seeking strength and stability with your mortgage, a long term fix might be your best option.
For advice on if a long term fixed rate deal is right for you or for more information on what options are available please call us on 0344 346 3672
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.