As expected, the Bank of England have just announced an increase of 0.75% to their base rate of interest, meaning it is now at 3%.
Whilst there will be plenty of headlines around this in the media, it is important to understand how this will affect mortgages. If you have a variable rate mortgage, this will lead to an increase in your interest rate and therefore monthly payments. As an example, a 0.75% increase on a mortgage of £100,000 would increase the interest payable by £750 per year or £62 per month. If you currently have a fixed rate mortgage, this change will have no immediate affect on your mortgage payments.
As you will be aware, mortgage rates have increased drastically in recent weeks and months, especially the fixed rate deals available. This has been because the cost of funding has increased considerably for mortgage lenders. This has partly been due to the fact that the markets have anticipated these rises in base rates, so this increased has already been “priced in” to current deals available. In fact, over the last couple of weeks we have seen fixed rate deals come down a little and although only time will tell, I don’t expect today’s announcement to result in increases to fixed rates again.
Please do not let the media spin on this cause you any panic, please get in touch with any member of our team if you have any questions or concerns.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments