Another base rate rise has just been announced by the Bank of England. Find out what the rate rise means for you and what’s happening with mortgage interest rates in general.
The Bank of England has just increased the base rate from 3.5% to 4%, which is the tenth consecutive rate rise since December 2021. So what does this mean for your mortgage?
If you’re on a fixed-rate mortgage, you’ll pay the same until your fixed-rate term 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 moves in line with the base rate, so you will pay more.
Falling mortgage interest rates
If you’re due to remortgage this year, don’t panic. Despite the base rate rise, mortgage interest rates on fixed-rate deals are coming down.
After the mini-budget was published last September, lenders temporarily withdrew mortgage products for new customers and reintroduced deals with higher interest rates. Interest rates peaked in November but have been falling ever since.
If your current mortgage deal is coming to an end, the likelihood is that your new borrowing costs will be higher, but the picture certainly seems much brighter than it did just a couple of months ago.
A number of five-year fixed-rate deals are expected to dip below 4% in the coming weeks, and one lender has already introduced a ten-year fixed-rate deal at 3.99%.
Lenders are competing for your business and therefore reducing rates to secure more customers. They also have more confidence in the financial markets now compared to the last quarter of 2022. After the mini-budget was published last September, lenders had to price their fixed-rate deals in line with market expectations, but the pressure on the market has since eased, and therefore the cost of borrowing has been falling.
Will there be any further base rate rises? The Bank of England has hinted that this might be the last increase for the time being. We’ll keep you posted on further developments.
If you have any questions about your mortgage, we’re here to help. Please contact us for advice.