Home-owners should take advantage of rock-bottom interest rates, says Falbros chief


Anyone with a mortgage should think about how they can take advantage of Bank of England’s decision to maintain bank rate at 0.25 per cent, says Falbros chief Alex Ewen.

Mr Ewen, senior broker at Falbros, made his observation after it was judged that the lower level of sterling continues to boost consumer prices broadly as projected, and without adverse consequences for inflation expectations further ahead.

It also expects pay growth to pick up over the forecast period and believes "subdued household spending growth is largely balanced by a pick-up in other components of demand".

The monetary policy committee added that since the August Report, "the relatively limited news on activity points, if anything, to a slightly stronger picture than anticipated".

GDP rose by 0.3% in the second quarter, as expected in the MPC’s August projections, although initial estimates of private final demand were softer than anticipated. Twelve-month CPI inflation rose to 2.9% and is now expected to rise to above 3% in October.

Mr Ewen said borrowers should check what level of interest they’re paying on their mortgage and whether they could save money by switching to one of the more competitive deals on the market.

He added: "Switching mortgage can now be done on a mobile in a matter of minutes, whether that’s on the bus to work, or waiting for the kettle to boil, and could shave hundreds of pounds off the average household’s monthly outgoings.

“Rock bottom interest rates offer the perfect opportunity for homeowners to overpay on their mortgage, increasing equity in their home and bringing down their debt. It's easier than ever to stay on top of your mortgage, and the rewards for proactively managing it can far outweigh savings made by switching energy or internet provider. At a time when prices are rising and wages are struggling to keep pace, now’s the time to dust off that old mortgage statement and see what else is out there.”

Meanwhile, Nick Dixon, an investment director at Aegon, said: “If employment and inflation inform interest rate forecasting, then both would suggest a rate rise is overdue. Unemployment is the lowest in 42 years and inflation exceeds its 2% target. The challenge, however, is understanding whether inflation is structural or a blip linked to the 2016 decline in sterling.

“With increasing demand for pay rises to make up declining real income, the inflation challenge is becoming structural. The pressure is on to increase public sector wages to counter inflation, but with a slim majority the government will be wary about matching wage increases with a tax rise. Hence fiscal policy will loosen and monetary policy will tighten to maintain macro-balance. While there has not been a rate rise today, over the next 12-24 months rates will rise higher and faster than market expectations. This will be good news for those seeking annuity income or with cash savings and bad news for mortgage holders.”


Falbros Ltd is authorised and regulated by the Financial Conduct Authority under reference number 745807.

Registered office: 1 Mayfair Place, London, W1J 8AJ. Registered in England Number 8147460.