Interest rates have increased for the third time in four months as the Bank of England tries to calm the rise in the cost of living. We wanted to write to you to explain how that might affect your mortgage. The increase to 0.75% from 0.5% comes as households face soaring energy bills, fuel, and rising costs to the weekly shop.
The good news is that if your mortgage is on a fixed rate, your monthly repayments are unaffected. So, along with the other c.74% of mortgage holders who are on fixed rate deals your foresight in fixing your repayments will now prove its value. People with fixed rate mortgages are likely to be affected once they reach the end of their current deal. An interest rate rise could make remortgaging more expensive.
If you have a variable rate tracker mortgage that is linked to the BoE base rate, you are likely to see an immediate impact on the amount you repay. Those on a standard variable rate (SVR) could see an increase which is decided by the lender. If you are unsure, it is worth checking your mortgage terms and conditions in your mortgage offer document.
If you are on your lenders SVR, please ensure that you get in touch as you could be paying more than you need to be.
However, further rate increases cannot be ruled out and whatever your mortgage type, we strongly recommend you look at the terms of your mortgage and contact your financial adviser, who can review your mortgage needs for the future and help you plan to be in the best position to cope with the current turbulence in financial markets. It’s always a very good idea to have a financial plan in place to deal with any potential interest rate changes.
