Are you ready for interest rate rises with your property or with your business borrowing?
The news today comes with mixed messages – the good news is that UK unemployment has fallen slightly from 7.7% yo 7.6%, which shows the UK economy is improving.
However, if you owe money on a ‘Non-Fixed’ interest rate basis, then this is a step closer to interest rate rises, albeit a small one.
The still relatively new Bank of England governor Mark Carney says there is a 40 per cent chance his threshold for interest rate rises could be met by the end of next year. Carney said that “Interest rates should not rise until unemployment falls below 7 per cent unless inflation was consistently above 2.5 per cent”.
So, I like the idea that the UK economy is gaining traction and moving forward, but I’d prefer my loans to remain at the all-time low! The FTSE 100 didn’t like the news this morning and sees this as a negative, rather than as an economic positive moving down 96.79 points or 1.44%, which is interesting.
I had myself already put in place over payments on my property interest only loans and set up investment vehicles to put together a lump sum for down-payment. I have also recently used cash to purchase equipment and assets in my business, to avoid having too high gearing, so that the impact of a rate rise is kept to a minimum.