What do the rising interest rates mean for me?
Posted by Nigel on Thursday 31st of March 2022.
What do the rising interest rates mean for me?
On March 17th the Bank of England raised the base rate for the second consecutive month by a quarter percent from 0.5% to 0.75%. The base rate is the main tool in influencing inflation, which is expected to reach around 8% this spring. By raising the base rate, the Bank of England expects inflation to fall back to the 2% target in the next two to three years.
The Bank of England reviews interest rates eight times a year, which is roughly every six weeks.
If you are currently on a fixed rate mortgage your monthly payments will stay the same until your fixed rate period finishes. If you are within the last six months of your product, we would recommend reviewing your options now, as it may be possible to lock in a new fixed rate to start at the end of your current deal.
If you are on a tracker or a variable rate mortgage you will see your payments increase. Your lender will contact you to let you know what your new payment will be and when it will start from. You can check for yourself on the Money Helper mortgage calculator but, as a general guide, the monthly payment for a £100,000 mortgage over 25 years at 2.5% pa will be £448. If the interest rate were to rise to 2.75% the new payment would be £461, a monthly increase of £13.
If you’d like to discuss your options, please do get in touch.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE
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