The Bank of England base rate has now increased from 0.1% to 0.25% in response to inflation of more than 5%. The base rate is used by the central bank to charge other banks and lenders when they borrow money – and influences what borrowers pay and savers earn. The Bank voted 8-1 to increase interest rates from a low of 0.1 per cent to 0.25 per cent, making it the first big central bank in the world to increase rates since the start of the pandemic.
This is first rise in 3 years and it’s not expected to be the last and whilst this may be a small increase, it will affect the way people are repaying their mortgage. We speak with Mortgage Specialist, Frankee Hearth from Mortgage Advice Bureau to explore how your mortgage repayments may be affected.
Which mortgage products are affected?
“The most vulnerable are those who are on variable and tracker rates. Both types of mortgage follow the Bank of England base rate so when the base rate increases, so does their mortgage repayments. It is predicted that mortgage repayments will increase by around £15 average per month, meaning some could be paying an additional £180 per year!
Fixed mortgages are not affected as the rate does not change, however if you are close to the end of their fixed term it is in their best interests to arrange a new fixed term mortgage before rates increase.”
Who will be affected?
“The average homeowner will have a fixed rate to help with monthly finance budgeting so you may not find they will be affected.
Investment buyers are the most vulnerable as quite a lot of them arrange tracker mortgages to make the most of their investment.”
How can we help?
“It has never been more important to look at mortgage options after a period of historically low rates and with Mortgage Advice Bureau having exclusive access to rates that cannot be found anywhere else it is definitely within your best interests to have a chat.
Homeowners and Landlords coming up to the end of their fixed rate should take the time to refix and avoid the interest rate rise.
Mortgage Advice Bureau offers Home Buyers Protection with every property purchase, meaning if the sales does not complete through no fault of their own, they will receive the costs back. You cannot obtain this anywhere else for free!”
For more information about Mortgage Advice Bureau, call Belvoir Peterborough on 01733 321500.