Up until December 2021, interest rates were at a historical low. The global pandemic hugely impacted economic activity which resulted in interest rates being slashed to an all time low. It has been an extraordinary period that has seen cheaper mortgages and a number of great deals for first-time buyers. However, the Bank of England has decided to increase interest rates in an attempt to combat rising inflation in the UK.
Mortgage lenders often increase their interest rates in line with the Bank’s decision, so what does that mean for you? Here at Planet Mortgages, we make it our mission to help you through the entire mortgage journey. So, we’ve compiled some useful information on the rising interest rates below…
How will homeowners be impacted by the increase in interest rates?
The Bank of England’s increased interest rate could mean that everyone is impacted by the change, including homeowners. Energy and fuel prices and costs across the board could go up. For homeowners, your type of mortgage will determine how you might be affected.
I have a variable rate mortgage, how will I be affected by increasing interest rates?
If you have a variable rate mortgage, then it’s likely that you’ll see an increase to your monthly payments. A tracker mortgage, which directly follows the Bank of England’s base rate, is particularly likely to increase. It’s important to check the small print of your mortgage agreement which will inform you how quickly the rise will be implemented. If you have a standard variable rate mortgage, these usually change at the lender's discretion. However, financial analysts and commentators have said that there’s no reason for lenders to not pass on the interest increase, so it’s likely that you’ll see an increase in your monthly payments too.
I have a fixed rate mortgage, will I be affected by increasing interest rates?
If you have a fixed rate mortgage deal, you’ll only feel the impact of the rising interest rates and see a change in your monthly repayments when your current term ends.
I have paid off my mortgage, will I be affected by increased interest rates?
If you have paid off your mortgage, then it’s highly unlikely that you’ll see any impact on your household costs.
Will homebuyers be impacted by the increase in interest rates?
Banks and building societies are likely to increase interest rates in line with the changes made by the Bank of England. This means that some of the deals that may have been available could have changed or no longer be on offer. As the rise is relatively small, it’s unlikely that there will be a huge impact on mortgage rates and offers. However, this could largely depend on the lender and other factors individual to each property transaction. Working with an experienced mortgage broker can help you to ensure that you get the best deals out there. Here at Planet Mortgages, experienced and qualified mortgage brokers will go above and beyond to find you an out of this world mortgage deal.
Whether you’re looking to purchase a property or you currently have a mortgage and you’re worried about how this news could affect you, we can help! We're experienced in finding the best mortgage deals in the galaxy and helping buyers land their dream home.
Looking for a mortgage broker in Colchester, Essex? Get in touch with a member of the Planet Mortgages team today!