How Might a Rate Rise Impact You?

The Bank of England governor Andrew Bailey warned that UK central bankers would have to move to curb rising inflation, suggesting that base rate could soon increase.

Speaking at an online discussion, Bailey said: “Monetary policy cannot solve supply-side problems – but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations.”

The Bank of England base rate is currently sitting at 0.1%. It was reduced from 0.75% on 24 March 2020, just at the start of the pandemic. For several years prior to that, it had largely remained at the 0.5% mark. The prospect of a rise in interest rates, perhaps as soon as next month, is now looming.

How could an interest rate rise affect you?
Naturally, one of the biggest concerns around a rise in interest rates is the potential impact on the cost of mortgages. We have been speaking about how low mortgage rates currently are but this is likely to quickly change if the Bank of England were to make a change to the base rate.

Homeowners with tracker mortgages will see an immediate change to their monthly payments, as their rate is directly pegged to interest rates. And a rate rise will almost certainly affect homeowners paying a standard variable rate (SVR) or discounted deal linked to an SVR, as lenders will adjust this independent borrowing rate too.

Although competition should help to maintain some attractive deals, higher base rates will mean that we begin to see some signs of fixed rates increasing.

Take Action
If you are on a tracker or have a remortgage coming up in the next six months, we could secure a new, incredibly low interest rate now.

If you’d like to discuss how we can support you, call our senior broker, Danny O’Keeffe on 0208 364 3444 or click the schedule a call button below to book a time slot.