What does the Bank of England Interest Rate Increase Mean for Your Mortgage?
The Bank of England has raised interest rates from 0.5% to 0.75%, the highest rate since 2009. The base rate is set by the Bank of England and is used by banks to calculate interest rates, although it is not compulsory to follow it.
Although this is not a huge increase, this is just another expense for home owners who have already had to take on hikes in council tax and energy prices.
What does a rise in interest rates mean for mortgages?
Of the 8.1 million households with a mortgage, 3.7 million - or 46% - are on either a standard variable rate or a tracker rate - which generally move with the official bank rate.
The average outstanding balance is £89,000 which would see payments increase by about £12 a month, according to UK Finance.
Lenders have started to issue their view on this with Barclays and the RBS group already announcing an intention to add the 0.25% to their variable rate. Your lender will write to you to advice if rates are to be increased
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How can you avoid a rise in your mortgage payments?
If you’re on a fixed rate mortgage currently then there is no need to panic. Your mortgage payments should remain the same until the end of your contract term.
If you are on a tracker or variable rate and your mortgage payments have risen, then you may be able to move to a fixed deal. Check your mortgage deal though to see if there will be a fee to do so.
What can you do now?
If you’re confused about any of this, or just want to look at a great fixed deal for yourself, why not talk to one of our mortgage brokers? There’s no fee to chat and we can compare the whole of the market to find one of the best deals for you. Call 01636674455 or use the form below to leave us a message.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. Think carefully before securing other debts against your home.
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