The latest base rate rise is the 11th consecutive increase since December 2021. Find out what this means for your mortgage.
The Bank of England has just announced the base rate has increased by 0.25%, bringing it up to 4.25%. The rate increased by 0.5% on 2 February to 4% and has increased steadily since December 2021.
The rate increases are an attempt by the Bank of England to curb rising inflation. However, until very recently, financial experts were convinced that the rate would remain the same.
Inflation increase
Unfortunately, inflation increased in February despite the government’s pledge to bring it down to 2.9% later in the year. Inflation has fallen in recent months, but last month saw an increase.
According to a recent article in Sky News, economists and the Bank of England expected inflation to fall from 10.1% to 9.9%, but it actually jumped to 10.4%.
The inflation increase has been driven by food and drink prices rising at their fastest pace in 45 years (18%), as well as supermarket shortages which drove up the cost of fruit and veg.
What about your mortgage payments?
So what does this latest increase mean for you?
If you’re on a fixed-rate mortgage, you’ll pay the same each month until your deal ends.
If you’re on a standard variable rate mortgage, you may pay more if your lender chooses to pass on the increase to you.
If you’re on a tracker rate mortgage, this is aligned with the base rate, so you will pay more.
There are approximately 850,000 properties on tracker rate mortgages and 1.1 million on standard variable rates. If you’re on a variable rate, your lender will contact you with details of how it will affect your payments.
If you have questions or concerns about your mortgage, get in touch with us straight away. If your fixed-rate mortgage deal is due to end this year, it’s essential to look at your options for a new deal in plenty of time. If you do nothing and the fixed term ends, your lender will place you on its standard variable rate, which will be higher than your existing rate.
A good time to move?
If you’re thinking of moving, you may be wondering if now is a good time. House prices increased slightly in February, according to Halifax. They increased by 1.1%, and the lender described the market as ‘stable’.
The housing market still has momentum. We’re hearing that some buyers are negotiating on price with vendors, and in many cases, both parties are reluctant to give way! However, according to the property website Zoopla, sellers are having to accept an average 4.5% discount on the asking price to achieve a sale.
It could be a good time for you to explore your options, and it’s always worth seeking advice. We can tell you what you could borrow and help you make an informed decision. Feel free to get in touch with us for advice about your mortgage.