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I’ve just finished watching the last F1 race of 2013, the Brazilian Grand Prix, and to the surprise of nobody Sebastian Vettel won again. This was his ninth straight win in a row, his thirteenth of the season and a fourth consecutive world title for him and the Red Bull team. On the slowing down lap he was talking to his team over the radio and said “we have to remember these days; we have to enjoy them while they last”.
Just as we have become used to Vettel relentlessly winning for the last four years, we have become used to low interest rates over a similar period and it did bring to mind the phrase ‘familiarity breeds contempt. In other words, we have become so used to things being a certain way that that we no longer think about it, until of course, it is too late.
Back in the summer of 2008 the Bank of England Base Rate was 5.0% and a five year fixed rate mortgage deal with a 15% deposit was around 5.5%. Today Bank of England Base Rate is 0.5% a similar fixed rate deal can be had for around 2.99%.
Now if you and your broker have had cause to look at your mortgage recently, if you have moved house or raised some further funds by way of a re-mortgage, then it would be safe to say that you will have looked into the mortgage market and hopefully secured yourself a good deal.
If however, you have had no reason to look at your current mortgage arrangements and you are one of the many thousands who are on their lender’s standard variable rate, then I strongly encourage you to do so over the next couple of months. Sit down with your broker and review your existing deal, if nothing else it is a great housekeeping exercise and the chances are you will find there is an attractive alternative for you to consider.
Finally perhaps, we should all take note of Sebastian Vettel’s words and enjoy these days while they last, as those of us that are older than we care to admit, remember the days of double digit interest rates and years ago could only dream of fixing our mortgage at a rate of below 3% for five years.
So when you make your 2014 New Years resolutions don’t forget to add “must review my mortgage” to the list, you might just find it is the most important one to stick to.
Steve Hardaker, Property Finance Consultant
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