The base rate has been increased by the Bank of England by another 0.5% so that it now stands at 2.25%. As the seventh consecutive increase, it’s also the second time in a row that a half-point hike has been made. This decision has been made by the Monetary Policy Committee (MPC) to combat the rising inflation rate, which is now at 9.9%.
How does this base rate increase affect your mortgage?
Inflation is continuing to increase, with the Bank of England predicting that it will reach 13% in the last quarter. Unfortunately, this means interest rates will also rise as a means to try and tackle this. Mortgage rates have already been rising gradually in response to the previous base rate hikes. So what does this new increase mean for your mortgage?
You have a fixed rate mortgage
Whilst you’re protected against an increase until your fixed term ends, it’s a good idea to look for a new fixed-rate product as you reach the last 6 months of that term. You may not have realised but you can secure a new fixed rate within the last 6 months rather than waiting until the end. This means you can lock in the lowest rate for a new fixed term as soon as possible.
The demand for competitive fixed-rate deals has increased significantly, both with new borrowers and those looking to remortgage. Lenders are limited to the number of each type of mortgage deal they can offer so the best deals run out very quickly. For this reason, it’s recommended to fix the mortgage rate for your home in Bexley as soon as you can. This ensures you benefit from a competitive mortgage deal before the interest rate increases any further.
You have a variable rate mortgage
If the mortgage rate for your Bexleyheath property is a variable one, it’s likely to be affected by the base rate increase fairly quickly. A tracker mortgage, in particular, is linked to the base rate so increases and decreases with it accordingly.
When paying your lender’s standard variable rate (SVR), a new rate increase and how much this is depends on your lender. You can usually expect the SVR to go up each time the base rate does. This is because your lender will more than likely wish to recoup their increased costs via your mortgage payments.
If you have a capped rate mortgage, however, you may not be affected by this base rate increase. This type of mortgage means a cap is set on the rate you pay. Therefore, the amount you pay won’t exceed the cap regardless of how much higher the base rate increases over this figure.
With interest rates expected to continue rising, prevent your mortgage rate from increasing along with them. Switch your variable-rate deal to a fixed one. This will give you peace of mind that you’re not paying over the odds for your mortgage.
Take action to secure a better mortgage rate
As mortgage rates are gradually increasing and the cost of living is rising, being able to secure a new mortgage is becoming harder. This is where we come in. We have unrestricted access to the market and this includes mortgage deals that are only available to borrowers via brokers. This enables us to search the entire market for the most competitive deals available.
At Trinity Finance, our expert brokers are here to find and secure the best mortgage deal for you. Located throughout Kent, London and Edinburgh, they can check your current mortgage product and take your circumstances into account before searching for an alternative deal to remortgage to. They are available to guide you on the mortgage types that are most suited to your situation and needs. For example, a capped rate mortgage or one with a fixed rate. With the latter option, they can help you decide on the optimum length for the fixed term, such as 2 or 5 years.
Get in touch with us on 01322 907 000 sooner rather than later to lock in a new mortgage rate. Our qualified brokers will strive to help you save on your monthly mortgage payments in the face of further base rate increases. Alternatively, email us at info@trinityfinance.co.uk and we’ll reply to you with more information about our vast range of mortgage and protection services.