The base rate is used by the central bank to charge other banks and lenders when they borrow money – and influences what borrowers pay and savers earn.
In December we spoke to Frankee Hearth from the Mortgage Advice Bureau on The Bank of England’s first rise since the start of the pandemic, you can read about it here. Since then The Bank of England base rate has risen for the second time in 3 months from 0.25% to 0.5%. The most is in response to rising inflation rates which the banks have predicted to rise by 7.25% by April. So, we’ve gone back to Frankee Hearth to see how this change will affect homeowners and mortgage repayments in the near future:
“With this recent base rate change, those homeowners who are currently on standard variable rates and tracker rates will likely see an increase in their mortgage repayments.
Back in December the first BoE rate rise meant that people who were not on fixed rate mortgages saw their payments increase by around £15-£20 per month.
With the latest base rate rise, those who are on tracker mortgages will see an additional £20-£25 increase and those on standard variable rates will likely see an increase of around £15-£20. This means within the space of just 3 months mortgage payments have risen on average by £35+ per month. Although this may not seem like a substantial increase, I have seen many cases where this has affected a clients lifestyle and they have had to cut back on things such as going out, holidays, even new clothes!
A fixed rate mortgage means that your payments will not rise and fall with the BoE base rate and therefore gives you more security and allows you to budget your finances more accurately. With the news of 2 BoE base rate rises in just 3 months it is now more important to fix your repayments to be protected from higher mortgage payments in the future.”
Mortgage Advice Bureau offers Home Buyers Protection with every property purchase, meaning if the sales does not complete through no fault of their own, they will receive the costs back. You cannot obtain this anywhere else for free!
For more information about Mortgage Advice Bureau, call Belvoir Peterborough on 01733 321500.
