Increasing interest rates – what does this mean for your mortgage?

As the cost of living increases, mortgage interest rates are too. You may have seen that the Bank of England base rate has increased from the 0.1% that was set during Covid-19 to 1.0%. The reason for this is to combat inflation which is soaring at the moment. When the Base Rate increases, lenders tend to follow suit as it costs them more to borrow money.

 

After a period of historically low rates, it doesn’t come as a huge surprise that interest rates have increased. Rates hit a record low during the pandemic and it was only a matter of time until they went in the opposite direction. Understandably with the rising cost of living, this may be a concern for some who currently have mortgages. If you currently have a fixed rate mortgage, there is nothing to worry about immediately. Your interest rate will not change until the expiry date of your fixed rate. If your fixed rate is expiring soon, this may mean that when you remortgage or secure a new rate that the interest rate will be higher than what you had previously.

 

If you currently have a variable rate mortgage such as a tracker or discount rate, it’s likely that your mortgage rate and monthly payments would have increased as a result of the Base Rate increase.

 

If you are in the market for a new mortgage, you must know that interest rates are set by the lenders individually. They are in control of rates being offered and can change these with very little notice. Most lenders give less than two working days notice to us that the rates are changing, so it’s important to act swiftly to avoid disappointment.

 

Your interest rate cannot be secured without submitting a full mortgage application, it’s important to be prepared with all of your documentation as soon as possible. We will be unable to submit your application without the required documents.

 

Although an increase in mortgage rates may be worrying, not least with the cost of living increase there are still some competitive mortgage products available. Speak to us for friendly advice that will see you get the most suitable products that meets needs and circumstances. 

 

Your home may be repossessed if you do not keep up repayments on your mortgage. 

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