The base rate has gone up to 5.25%, marking the fourteenth consecutive increase in the last 18 months. Find out what it means for your mortgage payments.
The Bank of England has increased the base rate from 5% to 5.25%. The increase was widely anticipated, despite inflation coming down from 8.7% in May to 7.9% in June.
• If you’re on a fixed-rate mortgage deal, your monthly payments will remain the same until your fixed-rate term comes to an end
• If you’re on a standard variable rate, you may pay more if your lender chooses to pass on the increase to you
• If you’re on a tracker rate, which moves in line with the base rate, you will definitely pay more
Despite the increase, there has been some good news lately. Several major lenders recently reduced their mortgage rates, including HSBC, Nationwide, Barclays, TSB, Skipton and Coventry.
Falling inflation and interest rates have resulted in a better outlook for house prices. Buyer demand has dipped, but residential transactions have gone up – they stood at 94,960 in June, 28% higher than in May.
During these unpredictable times, good mortgage advice is crucial. If you’re on a fixed-rate mortgage deal due to end this year or next, it’s important to prepare yourself. Depending on when your current deal expires, we may be able to lock in a competitive rate for you or help you prepare for next year.
If you’re worried about higher interest rates, it’s important to take action. For example, depending on your age and circumstances, we might be able to extend the term of your mortgage to bring your monthly payments down. Or we might be able to explore other options to make the situation more manageable for you. We’re here to help, so please get in touch.
Will the base rate go up again?
Meanwhile, you might be wondering if there will be further base rate rises.
While we can’t make any clear-cut predictions, it’s expected that the base rate may peak at 5.5% or 6% before the end of the year. The Bank of England says that if there were to be more evidence of more persistent pressures, then further tightening in the monetary policy would be required. However, further rate increases could occur less frequently.
‘We’re reaching the beginning of the end of interest rate hikes, and unless we have some unexpected negative news on inflation in the coming weeks, the Bank of England could slow the frequency of further increases,’ says MB Associates’ Sales Manager, Phil Leivesley.