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9 Aug 2018

What will increased interest rates mean for your mortgage?

Author: Grace Watson

Last week, the Bank of England raised interest rates from 0.5 per cent to 0.75 per cent – the highest level for almost a decade.

Whilst the increase is great news for the savers among us, it does mean an increase to the interest rates of more than three-and-a-half million residential mortgages, which have variable or tracker rates.

By how much will my mortgage payments increase?

If you are currently on a variable or tracker rate, your monthly payments may start to increase. Whilst homeowners with a mortgage will not welcome this increase to the bank rate, the increase is relatively modest, as the example shows below.

 

Impact of a 0.25% base rise on the average UK standad vartiable mortgage repayments

Mortgage

balance

Average standard

variable rate

current annual

repayment

Future annual

repayment

Total increase 

per year

£200,000 4.5% £13,487.76 £13,837.08 £349.32

 

When will interest rates rise again?

With the outcome of Brexit looming, it’s difficult to say if and when another base rate increase might occur. Whilst many homeowners are fearful of another rate rise in 2018, indications from the Bank of England governor are that we might not need to prepare ourselves for another rise until next year at the earliest.

For borrowers coming towards the end of their mortgage term, or for property buyers currently shopping the market for a deal, general advice is to secure a new mortgage product deal now, while interest rates are still relatively low.

Want to learn more about which mortgage product offers the most financial security? To explore our range of products from an exclusive panel of lenders, make an appointment with your local Romans Mortgage Advisor by calling 018 321 536.

 

Your home may be repossessed if you do not keep up repayments on your mortgage.
 
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
 
Leaders Mortgage Services is a trading name of LRG Financial Services Limited which is an appointed representative of Mortgage Advice Bureau limited and Mortgage Advice Bureau (Derby) Limited which are authorised and regulated by the Financial Conduct Authority. 
LRG Financial Services Limited. Registered Office: Crowthorne House, Nine Mile Ride, Wokingham, Berkshire RG40 3GZ Registered in England Number: 03155032
 
MAB 9504
 

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