The Bank of England (BoE) has today, on the 4th of August, raised interest rates by a further 0.5%, reaching 1.75% - This is the highest level since December 2008 and is the highest jump since 1995.
This is the sixth rise since December 2021, and is the Banks main weapon to fight against inflation - which has now risen to 9.4%.
How could this affect your mortgage?
The recent interest rate rises would have resulted in a relatively small rise in mortgage bills, but this increase is likely to make a more noticeable difference.
Fixed Rate -
Most people when taking out a mortgage will opt for a fixed-rate mortgage, and if this is the case for you then this rise will not affect you until your fixed term comes to an end. You will continue to pay the same amount as you currently do until your current deal expires. When your fixed-term is up and you come to remortgage, you might find that deals have become more expensive.
Tracker Mortgage -
A tracker mortgage follows the base rate alongside a set margin, so if you are on a tracker mortgage then your rate instantly will go up by 0.5% to match the base rate.
Discount Mortgage -
A discount mortgage will give you a discount on your lender’s standard variable rate (SVR), so your repayments will not instantly go up due to the base rise, but it is likely that your lender will increase their SVR in the near future to move more inline with the base rate.
If you are worried about how the interest rate rise may affect your repayments or your future mortgage application, please do not hesitate to get in touch.
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