Base Rate Rise.
The Bank of England announced an increase to its base rate by 0.25%, rising
to 4.5% in the twelfth rise since December 2021. Inevitably, this will affect everyone
throughout the UK. So what does it mean and how does it affect your mortgage?
Approximately 2.2 million people in the UK are on variable rate mortgages, either on a base rate tracker, discounted-rate deal or a standard variable rate (SVR).
For those on a tracker, directly following the base rate, payments will soon reflect the full rise. SVR’s change at the lender’s discretion, although most will go up.
Over 6 million mortgages are on fixed-rate loans. For those on a fixed-rate mortgage, the base rate increase won’t affect their deals until they come to the end of their product term. For some that might be in a few years’ time, for others this could be in the coming
months or weeks
So How Will This Affect My Mortgage?
We are well into 2023 and as the squeeze on cost-of-living continues, it may seem like
your finances are restricted. If you are one of the 6 million
UK homeowners on a fixed rate mortgage, you won’t have to consider a change until the end of your deal so
there is plenty of time to plan ahead. The base rate rise could lead to everyday items becoming cheaper,
helping you save a few pennies.
What About New Mortgages?
It’s been a challenge for many searching for new fixed-rate mortgages, whether for their
first property or replacing a deal. Despite lenders gradually reducing the cost of their fixed-rates, there are best-buy deals available that are cheaper. You may be tempted to wait for rates to fall, but trying to predict interest rates could cause problems?. For more information, contact us and we can support you and discuss the
options available to you.
Michael Markey CeMap