MORTGAGE ADVICE: Base rate increases to 0.25%

As you may have heard already, the Bank of England has voted 8-1 to increase interest rates making us the first country in the world to raise interest rates since the start of the pandemic … others will follow. Let us take a look at what this rate change means for you.

Base rate increases to 0.25%

Prices going up and up, inflation sitting at 5% was simply too much for the Bank of England’s monetary policy committee to sit back and not act. Act they did and yesterday increased the base rate from 0.1% to 0.25%.

The Bank of England has decided to act fast in order to try and curb the rate of inflation. By increasing the cost of borrowing they are hoping to stop us spending which means prices become lower to win our business.

I expect further increases going into 2022, watch this space…

What does this mean for your mortgage?

This depends on the type of mortgage you have.

Fixed rate

Well, if you are currently in a fixed rate deal, you will not see an impact until your rate ends. Remember we can secure you a new mortgage deal six months prior to your rate ending meaning you secure a mortgage rate available today rather than those available in six months’ time (which are likely to be higher).

Tracker rate

Being on a tracker rate means your mortgage is directly linked to the Bank of England movements. After yesterday’s announcement, you will see an increase of 0.15% on your rate immediately.

For many buy to let investors paying interest only this will be an increase of £12.50 a month per £100,000 of borrowing.

Homeowners on a repayment mortgage will see a difference in their monthly payment next month. You can use our calculator to see how it effects you.

How will this interest rate change affect me?

Finally,

This is my final newsletter of the year and I’d like to say thank you to all of our clients and introducers for your business. We really do appreciate it.

Wishing you a Merry Christmas and a Happy New Year!

Take care
Michael