Inflation: Mortgages could rage out of control as inflation soars – impacts explored | Personal Finance | Finance
Inflation figures released by the ONS have shown a rise in prices, which have increased to 1.5 percent in April. When compared to the 0.7 percent recorded in March, this shows a significant difference. However, for those with a mortgage or looking to buy property, this could potentially have significant impacts, both in the short and the long-term.
Each examine the prices of consumer goods which Britons spend money on throughout the year.
However, the RPI takes into consideration housing costs such as mortgage interest payments, which are particularly important.
Recently, Britons have been forced to deal with a buying frenzy, which has resulted in UK house prices soaring.
Figures from Rightmove, a popular home-searching website, have shown the asking prices for properties have risen by almost £6,000 in a month.
If someone is on a variable mortgage rate, this is where potential problems could arise.
These individuals may be forced to deal with the fact their monthly mortgage payments could rise as inflation changes.
As a result, they may need to rebudget to ensure they can afford to keep up with monthly payments.
This is part of the reason why many mortgage experts suggest getting on a fixed-rate deal is particularly important.
Individuals can seek professional help from a mortgage broker or financial adviser to see how changes may impact them.
More to follow…
Laith Khalaf, financial analyst at AJ Bell, commented on the matter.
He said: “Inflation has doubled, with price rises occurring in key areas where it’s hard for consumers to control spending.
“At current levels, inflation is nothing to fret about, but there is rising concern that the fiscal and monetary response to the pandemic has sown the seeds of an inflationary scare further down the road.
“For the moment, the Bank of England is dismissing consumer price increases as a natural bounce back from the depths of the pandemic last spring.
“But the economic recovery could be a Trojan horse, smuggling inflation into the UK, right under the nose of central bankers.”