The Bank of England’s monetary policy committee has made its decision on the base rate, raising it by 0.25% to 5.25%. This is the highest rate since April 2008, but it’s a smaller increase compared to the previous hike in July. Inflation has shown signs of easing, falling more than anticipated in June, but it remains significantly above the Bank of England’s 2.0% target at 7.9%.
According to Rachel Springall, an independent mortgage monitor expert at Moneyfacts, the recent base rate increase might disappoint borrowers concerned about higher mortgage repayments. Those with low-rate fixed mortgages should consider overpaying to reduce their loan and mortgage term.
It’s important to be aware that mortgage interest rates are higher than some may realize, so borrowers should prepare for higher repayments when their lower-rate deal ends. If consumers are struggling with their finances or feel trapped in their mortgage, seeking independent advice to review their situation is advisable. Fixed-rate mortgages can provide peace of mind by securing a stable monthly repayment, especially as rates have increased compared to December 2021.
“A potential increase of 0.25 percent on the current average SVR of 7.85 percent could lead to approximately £79* extra repayments over two years.
With affordable housing in short supply and soaring house prices, first-time buyers already facing a financial squeeze due to the cost of living crisis may find it harder to enter the market. For borrowers, it’s crucial to consider whether to delay mortgage applications to build a larger deposit.
“Those looking to remortgage may need to explore options like downsizing if they can’t switch deals. Seeking advice is vital in navigating this challenging environment.”
Amidst rising house prices and a scarcity of affordable homes, first-time buyers face difficulties entering the market due to the cost of living crisis. It may be wise for borrowers to postpone mortgage applications and save for a larger deposit. Remortgaging individuals could consider downsizing if changing deals isn’t viable. In this demanding scenario, seeking expert advice becomes crucial for making informed decisions about mortgages and housing.
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