In a bid to keep inflation at 2% over a two-to-three-year period The Bank of England has increased rates for the third consecutive time since December, by 0.25% to 0.75% (as of 18/03/22). 

What does this mean in £’s and pence?

As an example: Monthly payments on a £200,000 mortgage, currently at 2.5%, with monthly payments of £897 would increase around £25 a month for each 0.25% increase.

Will everyone be affected?

Unsurprisingly, whenever the Bank of England announces an increase to the base rate there is always a sense of panic that all mortgage rates will follow suit. However, as with many things in life, this is not as clear-cut as lenders simply passing on an increase and everyone further tightening their belts.

Firstly – if you are on a fixed rate (which accounts for 74% of outstanding mortgages) then you can breathe a little easier as, obviously, your rate won’t be changing. Although if your rate is soon up for renewal re-mortgaging could be expensive. 

But what about the other 26% who aren’t on a fixed-rate product?

Only mortgage customers with Trackers or variable rate products that tend to follow the base rate will see a fairly immediate change.

These products are also sometimes used by lenders when a fixed-rate ends.

A standard variable rate product can change at the lender's discretion – meaning that they don’t always pass the changes on to customers. If you are unsure, check your mortgage terms and conditions in your original mortgage offer.

What if you are currently looking at arranging a mortgage?

If you are currently on a fixed rate that is coming to an end, or you are looking to re-mortgage, rates may not be as low as they were when you previously fixed. However, there are still some deals to be had.

By using Evolve as your mortgage broker you can be sure that we will explore the whole of the market for your mortgage and your lending can be secured at the best current rate for your circumstances.