On 2nd November, The Bank of England has voted to raise the base rate to 0.5 %, the first increase in more than ten years.
The Bank’s monetary policy committee voted seven to two to raise the rate to help tackle rising inflation and on the back of better than expected economic statistics in the country’s general economy.
Apparently a fifth of people with mortgages have never experienced a interest rate increase, but about half of those took out their mortgages after the Financial Conduct Authority made lenders introduce additional affordability stress tests in 2014.
Those stress tests require mortgages to be able to withstand an increase in mortgage rates of around 7 %. I am confident that those households will be fine!
Apparently around 60% of mortgages are on fixed rates, (it was 86% last year at Mortgage Required), and when these fixed rates finish, rest assured, the fixed rates on offer will be very competitive – possibly even comparable than current fixed rates.
Those borrowers not currently enjoying fixed rate mortgage or tracker mortgages will be on their lender’s Standard Variable rate (SVR). These rates are set by the individual mortgage lenders rather than the Bank of England, so lenders have a free reign on any increases.
If you are currently on your lenders SVR, it’s time to take some advice and switch rates – you are now at your lender’s mercy!
To be honest, the rate increases hardly made the front pages. Lenders had foreseen the rise and already adjusted their mortgage products a couple of weeks before. The increase on a £200,000 mortgage is around £22 per month, which isn’t exactly breaking news!
Contact us do discuss your mortgage on 01628 507477.
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