In this video I explain what the base rate rise in the UK means to you if you are on a standard variable rate, coming to the end of a fixed rate and why this is happening.
This short video will explain what has just happened with interest rates and what it means to you and your mortgage interest payments If you're on a standard variable rate. I will also explain what can happen when you come off whatever fixed rate you currently have.
Watch this short video to the end to see how much it may cost you.
The bank of England has increased interest rates for the fifth time in as many policy committee meetings, the new base rate is 1.25%, a 1.15% base rate increase since December last year, when it was a 0.1%. this is the highest it’s been in 13 years. it means that the new base rate, if passed on by lenders will mean an increase in interest payments per year of £1150 pounds for a mortgage balance of 100,000 pounds or £95.86 since before the first rise in December 2021.
This is on top of the rises in electric, food and petrol prices due to inflation rising to 11%.
I have received emails informing me that the new base rate will be implemented from tomorrow from certain lenders.
It has been reported that it is expected by December 2023 interest rates could increase to two and a half percent. If this prediction is correct you can expect that when we hit the 2.5 base rate you will be paying an additional £2400 in interest compared to the same £100,000 mortgage at the start of December 2021.
If your mortgage balance is 50,000, it will be half of this, but still a rise of 1200 pound a year or a hundred pound a month in interest payments. If your mortgage balance is 200,000, then it will double. So you will be paying 4,800 pounds a year or 400 pounds a month more in interest. These rises are not inevitable but with 5 rises in 5 meetings and another 4 left this year and 8 more next before the date arrives it is more than plausible.
With inflation high it’s one of the main ways the Bank of England has to control it.
If you're on a standard variable rate and stay on it, these rate rises will affect you immediately when implemented by your lender. This was announced 3 hours ago, and I have already had several emails from companies stating that the new rate will be implemented tomorrow. Your option is to act fast, re-mortgage and save on interest payments.
Why pay more if you don’t have to.
If you are on a fixed rate and within seven months of finishing that rate, or a year in some cases, a mortgage broker may be able to assist you to reduce the impending risks of higher payments.
The rates may not and most likely won’t be as good as you are on now but you could save substantial amounts of money through getting ready now so you have a smooth transition when the rate ends. The closer you leave it to the time that your rate ends the more likely in the current climate of mortgage rate rises you will be paying more.
There is the possibility that they don’t go up, but do you want to take that risk?
Historically these rates are low, but they are increasing faster than any time in the last 25 years.
You have choices,
You can do nothing and if the rates go up again pay more.
You can re-mortgage and save yourself from future predicted rises.
Remember in the UK Mortgage Brokers like myself are not allowed to call you to see if we can assist you unless you already have a business relationship with us.
If you have a broker they should already be in contact with you.
If you don’t it’s all on you, you will have to contact a broker for assistance and hopefully they can help you.
My question to you is.
What are you going to do? Please? Comment below.