Interest Rates Impacting Mortgages

Interest rates increased to 1.75%

The Bank of England has announced that interest rates will be increased by half a percentage point to 1.75%. This is the biggest rise in interest rates since 1995.

It has also predicted that the UK will enter a recession later in the autumn and expects it to last into 2024.

The Bank of England says it has taken this decision to tackle inflation as much as possible.

Current interest rates stand at a 40-year high. The Bank of England aims to get inflation under control by reaching an interest rate target of 2%.

Blame for the rise put solely on Vladimir Putin

It has predicted that inflation could rise as high as 13.3% in the autumn, as energy rises continue to increase.

The Bank of England has put the blame for the rise solely on Vladimir Putin. His war in Ukraine and slashing gas exports to Europe have caused energy prices to increase significantly.

Consumers will have to pay far more back

A looming recession and rising inflation, currently standing at 9.4%, doesn’t bring good news to those borrowing money.

Increasing interest rates mean that consumers will have to pay far more back when paying their mortgages and loans off.

Mortgage holders should shop around

Industry body UK Finance has predicted that consumers on tracker mortgages could be paying as much as £171.47 more per month, which could put a massive strain on families across the UK.

UK Finance also said that consumers on standard variable rate mortgages are expected to be paying £108.37 more per month.

Those on fixed-rate mortgages are not expected to face any rises until their current deal expires.

UK Finance has estimated that around 1.3 million fixed-rate mortgages are due to expire this year – meaning these consumers will be paying more next year.

The current advice for mortgage holders is to shop around for new deals or lock in a new fixed-rate mortgage if theirs is due to expire.

Remortgage customers may have more equity

Rachel Springall, of the financial information company Moneyfacts, said: “Borrowers who have not locked into a fixed rate would be wise to move quickly to secure a new deal as interest rates continue to climb.”

She went on to say: “On the other hand, remortgage customers may find they have more equity in their home but will need to get some independent advice on whether they can comfortably afford to switch their deal.”

First4Lawyers works with expert mortgage solicitors who can help you if you want to remortgage your home or release some money from it.

Give us a call today, enquire online, or request a callback when it’s convenient for you.