The Bank of England increased its base rate from 5% to 5.25% during its Monetary Policy Committee meeting on 22nd June. Here, you can find out exactly what that means for your mortgage and its monthly repayments.
Do the interest rate increases mean my mortgage will go up?
If you have a standard variable or tracker mortgage then yes. With a tracker mortgage your interest rate directly tracks the Bank of England base rate, so the increase will be immediate and in line with the jump from 5% to 5.25%.
It is estimated that monthly payments on the average tracker mortgage are up by £23.71 following the latest base rate hike.
If you have a standard variable rate mortgage then it’s less predictable as it’s up to your lender. The most likely outcome is that they will choose to increase their rates as well, but it could be by slightly more or less than the base rate jump.
On average, the typical monthly payment on a standard variable rate mortgage is estimated to have risen by £15.14.
It’s good news though if you’re already on a fixed rate mortgage, as your interest rate is set for a specific term. So your monthly repayments won’t be immediately impacted by the interest rate increase.
Moreover, some experts are predicting that new mortgage products are unlikely to see a significant rise in interest rates following recent base rates shift. This is because these increases were forecast in advance and already factored into many lenders’ product ranges.
It’s still worth keeping an eye on rates though, as when your fixed term comes to an end you’ll need to be prepared for a potentially big leap in your repayments if rates have increased significantly since you secured this particular offer.
How much will my mortgage payments be?
If you’re on a variable rate mortgage, you can use our mortgage difference calculator below to compare your current interest rate to the new one you will be moved onto following the base rate change.
Mortgage Difference Calculator
Our mortgage difference calculator will show you how much your monthly repayments could change with a different interest rate to what you have currently. Enter your outstanding mortgage amount, remaining term, both current and new interest rate. Our calculator will then do the rest.
We estimate your current monthly repayments are
At this rate, your payments could change by…
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You can also use our calculator above to compare the rates on two different deals if you are applying for a new fixed-rate mortgage or remortgage.
When will interest rates go up again?
The Bank of England reviews interest rates eight times a year, roughly every six weeks, and the next interest rate decision is due on 21st September 2023. It’s the Bank of England’s responsibility to try to keep inflation at around 2%, and with the cost of living crisis continuing to put pressure on the economy, the latest rise was expected, though the percentage point it was raised by was less than some had previously forecast.
Although nothing is absolutely certain, some market experts believe it’s likely that the base rate is approaching its peak. While inflation remains high further measures cannot be completely ruled out, however.
Should you remortgage now?
This very much depends on your current deal. With the base rate today at 5.25% there might well be savings to be made by remortgaging to a better deal now.
If you have a fixed-rate mortgage that’s due to end in the next six months for example, then it may be worth getting your new deal set up now rather than waiting until it ends. If you have a standard variable or tracker mortgage and are worried about hikes over the next few years remortgaging now to a fixed rate mortgage could be one way to lock in repayments and at least know where you stand.
Your best plan is to get advice from a mortgage broker – they’ll be able to assess your tracker versus fixed rate mortgage options, and help you find the best fixed rate mortgage deals.
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