Worried about the interest rate rise?

Worried about the interest rate rise?

… Just ride with it.

 There’s a general feeling of Brexit-fueled uncertainty in the air – even here on our sun-kissed and peaceful shores in the UAE. Unfortunately, that sense of unease seems to have given rise to a growing number of ‘pleas for help’ from expats worried about the interest rate rise, after the Bank of England notched it up by a quarter of a percentage point to 0.75%.

Today, I’d like to shine a light on how the ‘rise’ is affecting your mortgage, pensions and of course your currency, by highlighting a few key points to help you decide whether you need to take action.

Property:

 If you’re wondering whether it’s a good time to buy in the UK, the answer is yes. The exchange rate is in favour of our dirhams and there are some fantastic opportunities to buy in the UK property market, especially in the north of the country. Birmingham and Manchester both offer great prospects for capital appreciation to investors, and so long as you secure the right mortgage then you’re more likely to make the most of those opportunities.

If you already have a mortgage in the UK, the interest rate rise will only really have a (minimal) impact on you if you have a variable rate mortgage. However, these are quite unpopular mortgage options, with most buyers opting for a fixed rate.

As an expat investor, there are a range of mortgages available to suit your individual needs. It is important to sit down with an advisor to work out which one suits your personal economy the most.

Pensions:

 If you’re Invested in UK bonds, then you’re in luck. Higher interest rates actually fuel better returns from UK bonds, making this a good time to do a bit of ‘window shopping’ for a retirement income through an annuity.

For those looking to make a pension transfer, my advice is get some advice. Transfer values (currently high) are likely to decrease because providers (quite sensibly) prefer to finance guaranteed pension payments. For anyone in this bracket, you’ll be doing your pension pot a great favour if you take some regulated advice.

Currency:

Right now, it’s a great time to capitalize on the pound-to-dirham exchange rate, which is favouring your currency here in the UAE. Despite the rate rise, the pound has remained weak so if you’re lucky enough to have savings and not debt in the UK, you’re quite possibly quids in. I’d only say be wary of getting a bad deal from the exchanger if you’re sending money home, and if in doubt, contact Hoxton and speak to our in-house FX brokers to get the best rates.

For any queries about pensions, mortgages… even pre-Brexit jitters, drop me a line or come and see us at Hoxton HQ. Our door is wide open and we serve great coffee.

 

Related posts

#HighlightYourTwilightYears

A duty incumbent on all of us within the financial industry, and certainly within my practice at Hoxton, is to help protect and secure the personal economy of the humble hard-working soul. As a family man driven by high ethics and transparency, I care deeply about my clients and...

Read More