The end of last year saw the Bank of England announce a 0.15 increase on the base rate, pushing it up to 0.25%. This was in response to rising inflation as prices soared. After reviewing the data, and despite rising Omicron cases expected to hit the economy, in December the Monetary Policy Committee (MPC) voted to implement the first rise for over three years. 

With global energy prices causing huge increases and the expected energy price hike that is expected in April, everyone is watching with bated breath for the next Bank of England announcement. Due on the 3rd of February, the base rate is expected to be increased even further to help offset some of the expected 40% rise in the energy price cap.

As the base rate is used by the central bank to charge other banks and lenders when they borrow money, this has a direct effect on what borrowers can expect to pay.

So, what does this mean for mortgage rates?

In real terms, this base rate increase can be expected to hit current mortgage holders. For fixed rate mortgage holders whose deals are not about to end, the December base rate increase and any further rise in February will not have any significant impact until those terms come to an end. However, if you are a borrower on a tracker or standard variable rate (SVR) mortgage that follows the base interest rate, then these increases are going to have harder financial ramifications, especially combined with rising food and fuel costs.

Therefore, it is important, especially for those on the tracker and standard variable rates (SVR), whose lenders can increase rates by more than the 0.15%, to see if you can cut some of the expected rate rises by looking into better, fixed rate mortgage deals. Although lenders have only increased rates slightly to account for the Bank of England announcement in December, as the mortgage market factors in any possible further increases, borrowers can expect mortgage rates to rise and so it would be advisable to act now to secure the best savings.

Even if your current mortgage deal is not due to end in the next few months, we would advise speaking to a mortgage broker to gauge your options to move onto a fixed rate mortgage. Mortgage brokers can access around 98% of lenders and get exclusive rates and deals that would not be available to other brokers or by going directly to the lenders. This means they can help find you a cost-effective deal that will work to accommodate the interest rate hike.

Mortgage brokers such as Property Link Homes offer online services such as a mortgage calculator to work out how much you may be able to borrow, or repayment calculators to work out your affordable monthly repayments. *

However, we would always advise speaking to one of our experienced and friendly staff to get the best advice and to help better understand your mortgage options. If you are interested in how we can help you, and you are looking to re-mortgage, buy-to-let, looking for commercial property or are coming to the end of a fixed term deal, then please get in touch with one of our expert team today.

*As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.