The base rate has increased to 5.25%

A new increase to the base rate, which now stands at 4.75%

Following the latest meeting by the Monetary Policy Committee (MPC), the Bank of England base rate has increased to 5.25%. This is a 0.25% increase on the previous rate of 5% and is the 14th consecutive rate hike. This decision was made as a continued effort to curb inflation. Despite recent falls in inflation, its level is still too high at 7.9%. This is almost four times higher than the Bank of England’s target rate of 2%.

The forecast for UK mortgage rates

Although the base rate has continued to increase, some lenders have already lowered their fixed rates for mortgages in response to inflation dropping to 7.9% in June, which was a bigger drop than expected. It’s hoped that fixed rates in general may have reached their peak and that more lenders will follow suit and gradually reduce their rates. This is encouraging news for borrowers looking to secure a fixed-rate deal.

Even so, fixed rates are still currently a lot higher than they were before. This means that anyone coming to the end of their fixed-rate deal and wanting to take out a new one will, unfortunately, have to pay a significantly higher rate than their current one.

How will your mortgage repayments be affected?

If you have a variable rate mortgage, your interest rate will more than likely increase. This is because your lender will try to recoup the extra charges they’re having to pay. This is especially the case with a tracker mortgage, which usually tracks the Bank of England base rate. Each time the base rate increases, so will your tracker mortgage rate. In turn, the amount you have to pay each month will increase.

If you currently have a fixed-rate deal, your repayments won’t be affected. However, if your fixed term is due to end within the next 6 months, be sure to look around for a new deal. That way, you won’t automatically be switched to your lender’s standard variable rate (SVR).

What can you do about your mortgage now?

If, as mentioned above, you’re in the last 6 months of your fixed-rate deal, you can arrange a new deal now that will start when your existing one ends. This allows you to shop around for the best deal available now and avoid the risk of having to pay a higher rate in the future if you leave your search until nearer the end of the fixed term. You also won’t be penalised by the lender with an early repayment charge.

If you have a variable rate mortgage and are concerned about further rate increases, you have a couple of options. You can either search for a better variable-rate deal to remortgage to or consider a fixed rate for more security. Our mortgage brokers will look at your existing deal and compare it with the alternatives available. They’ll take the early repayment charge into account as well as any other fees payable when ascertaining the suitability for you to switch to a new deal.

We can help you find the right mortgage solution

Our mortgage brokers are on hand to give you expert advice when it comes to your existing mortgage and whether or not you should make any changes. If you’re struggling to meet your repayments, they can guide you on the help that is available. For example, the measures detailed in the Mortgage Charter. If they feel that switching to a different mortgage product is more beneficial for you, they’ll discuss all of the options with you, weighing up any savings you can make with a lower interest rate against any fees that may be payable.

At Trinity Finance, we have access to exclusive broker-only deals. This gives you more options than if you approach lenders direct or compare deals using online platforms. Just give us a call on 01322 907 000. We’ll be ready to discuss your situation and find the best mortgage solution to meet your needs.