In a majority vote by six of the nine members of the Monetary Policy Committee (MPC), the base rate has been increased by another 0.25% to reach 1.25%. This is the fifth consecutive rate increase since December 2021. It is the first time the rate has been higher than 1% since 2009. As inflation has continued to soar and three of the nine MPC members voted for a higher increase during the last vote, another increase was expected. But what does this mean for your mortgage? Will your monthly payments go up and is there anything you can do about it?
How does this affect your mortgage?
The base rate determines the level of interest that commercial banks are charged by the Bank of England. As their repayment costs increase, they usually pass these extra charges onto their customers. As a homeowner, this means that the new increase in the base rate may once again increase the cost of borrowing for you.
If you have a tracker mortgage, which is a type of variable rate mortgage, your monthly repayments are likely to increase straight away as this usually tracks the base rate. For other types of variable rate mortgages, you can expect an increase in your repayments shortly after this new base rate increase. If you are paying your lender’s standard variable rate (SVR), an increase to your mortgage payments depends on whether your lender decides to increase their rate and by how much.
If you have a fixed-rate deal for your home in Bexley, your rate will stay the same until the fixed term ends. When you come to find a new deal, however, you may not find such competitive deals available at that time. If you revert to your lender’s SVR instead, it’s likely to be much higher than you’re paying now.
What can you do?
With a fixed rate mortgage, you can search for and secure a new mortgage deal up to 6 months before your existing fixed-rate deal ends. If the end of your fixed term is approaching, it’s highly recommended to lock in a new fixed rate as soon as possible. This is to avoid paying more if the interest rates increase any further.
If you have a variable rate mortgage for your Bexleyheath property, it’s advisable to switch to a fixed-rate deal. This may enable you to benefit from a more competitive rate than you’re paying now. You’ll also have peace of mind that you won’t be affected by any future rate increases during that fixed term.
Take action now to secure a new deal
The rate of inflation is expected to continue rising and, as a countermeasure, so too is the base rate. In fact, during this latest vote, three of the nine MPC members voted to increase the rate to 1.5% rather than 1.25%. Bearing these factors in mind, now is the time to consider your remortgaging options if you haven’t done so already.
Get in touch with our mortgage brokers – located in Kent, London and Edinburgh – for expert advice on your mortgage. They will check your existing deal and search for competitive alternatives that you can remortgage to. Just call us on 01322 907 000 to find out how you can benefit from switching to a new deal. Alternatively, send us an email at email@example.com. One of our mortgage advisers will reply to you as quickly as possible.