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If you are in property development or property rental then the setting of the interest rate is an important factor to know for your investment. Increases in interest rates can cause large costs in your monthly mortgage payments affecting to soundness of any investment that you have made or are considering making.
The interest rate is set by the bank of England and is increased and decreased depending on the British Economy, predicating these fluctuations in the interest rate can help improve any investment you may consider making.
In reality no one can fully bank on correctly banking on how the interest rate may change from year to year. That said over the last few years, while the economy has been struggling interest rates have remained low, problems with keeping interest rates low is that this may cause increases in inflation, this is one of the big warning signs that interest rates may be going up.
One safe guard for interest rates increasing is fixing your mortgage this means that if the bank of England interest rates increase your mortgage will remain the same for a fixed period of time. It is important to note that if interest rates go down you will not benefit from the drop within your mortgage repayments
A qualified mortgage advisor will be able to discuss the impacts of your mortgage cost as interest rates change, although may refrain from making predications regards how the interest rate has been set.
Low interest rates obviously helps home buyers and borrowers, a negative impact of low interest rates is that those of us with savings will miss out on any interests that may build up on our saving accounts.
During the 1980`s interest rates where high and the country struggled with large inflation, after the credit crunch which saw many home owners encounter difficulty meeting their mortgage commitments, resulting in the UK government and the bank of England reducing the interest rate to 0.5%.
When looking at taking out a mortgage to purchase a property or loan to make home improvements it is important to ensure what will affect your interest rate charged, the majority are linked to the bank of England but some lenders have their own rates or linked to other markets.
