Another base rate rise has just been announced by the Bank of England. Find out what this means for your mortgage.
The Bank of England has just announced that it is increasing the base rate from 1% to 1.25% in a bid to fight inflation. The rate is now the highest it’s been since 2009 and this latest increase marks the fifth consecutive rise. The decision follows UK inflation reaching a 40-year high of 9% in April. Inflation is expected to reach over 11% in October this year, which is 1% higher than previous predictions.
Some financial experts felt that the Bank of England might have increased the rate even more, perhaps by a half a percentage point rather than a quarter.
The Federal Reserve Bank in the US last night announced it was raising interest rates by 0.75%.
What happens next?
What does this latest increase mean for your mortgage?
If you’re on a fixed-rate mortgage deal, your monthly payments will stay the same.
If you’re on a standard variable rate, your lender may choose to pass the increase onto you which means you could pay more. Get in touch with us to see if we can secure a better deal for you.
If you’re on a tracker rate, the interest rate is guided by the base rate which means the increase will be passed on to you and you will pay more.
Planning ahead is key and could save you money. If you’re on a fixed rate deal due to end in the next six months, talk to us about remortgaging.
If you do nothing, your lender will place you on its standard variable rate when your fixed term ends which is likely to be higher. So, the more time we have to shop around on your behalf, the more likely we are to find the most competitive deal for you.
Sort out your paperwork
Be prepared. Get your paperwork in order as soon as possible. Make sure you have your ID (passport and driver’s licence) and three months’ worth of bank statements and payslips ready to supply to us. If you’re self-employed, you’ll need two years’ worth of audited accounts and tax returns.
Having your documents ready is hugely important as many lenders are currently withdrawing mortgage products at very short notice. The faster you can hand over your paperwork to us the more chance we have of securing you the best deal while it lasts.
Despite this latest increase, interest rates are still relatively competitive compared to how they have been historically. It is still possible to get a good deal on your mortgage.
We recommend talking to an experienced mortgage broker who can search the market on your behalf and find the best mortgage loan to suit you.
Contact us for advice and we’ll be glad to help.