On Thursday 17 March the Bank of England raised interest rates from 0.50% to 0.75%. The increase is a measure to tackle soaring inflation, with the latest figures from the consumer prices index predict inflation is expected to peak at around 8% during the second quarter of this year, averaging close to 6% throughout 2022. This is the fastest price growth for over thirty years.
The increased interest rate means a homeowner with a typical tracker mortgage will see their monthly repayment increase by £18.00 a month for a £150,000 mortgage arranged over 20 years.
For a repayment mortgage of £150,000 over 20 years the monthly cost will increase by £53.46.
Nearly three-quarters of all mortgage borrowers in the UK are on fixed-rate deals, thus only seeing a change to their monthly repayments when the existing term ends. It is estimated that 1.5m fixed-rate deals will expire this year, with a further 1.5m expiring in 2023.
With inflation continuing to surge, it was anticipated that a further increase to the interest rate was likely to occur in the first quarter of this year. We anticipate further increases in the coming months – it is possible there could be another two or three further increases throughout 2022.
With further rate rises expected, it is inevitable mortgage rates will also increase again later this year, albeit they remain at extremely low rates currently. If you are due to remortgage in the coming months, your Cooper Associates mortgage adviser will contact you to discuss the options available to you. A mortgage offer can be obtained up to six months in advance, allowing you the peace of mind to secure a rate now and not be affected by any future increases to the base rate.
As always, we are here to assist you, whether you are looking to obtain a mortgage or if you have a query about the current mortgage market. Please contact your mortgage adviser directly if you have any questions or would like to discuss your situation.