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Base Rate increased for the ninth time in 12 months

The Monetary Policy Committee has voted to increase the Bank of England’s base rate once again…

The Bank of England’s Base Rate which is sometimes referred to as the Bank Rate is used by the central bank to charge other banks and mortgage lenders when they borrow money from them.

The Base Rate then influences what borrowers will pay and what saver will earn.

This latest increase marks the ninth consecutive increase since the rate was initially raised from 0.1% to 0.25% in December 2021.

The curve on hiking inflation has begun flattening as we saw a drop tom 10.7% in the 12 months to November 2022, this is compared to the 12 months to October 2022 when it was 11.1%.

The Bank predicts that inflation will continue decreasing over the first half of 2023.

What does this mean for my mortgage?

Fixed means fixed

Fixed rate mortgages do what they say on the tin. The interest rate you agreed when you applied will remain the same until your fixed-rate period comes to an end. However, you will want to keep an eye on that end-date and sort a new deal out if yours is due to expire within the next 6 months.

Standard variable rate (SVR) & ‘discount’ mortgages MAY increase

The lenders are in complete control of these rates, and they can increase and decrease them whenever they feel it necessary. You’ll move onto the SVR after your fixed rate or tracker mortgage ends and discount mortgages track the lenders variable rate so they will also be affected.

Tracker rates will increase

If your mortgage is tracking the base rate, then a change to the base rate will increase your mortgage repayments.

I am concerned about my mortgage, what should I do?

As we’ve explained, if you’re on a fixed rate then you don’t need to be concerned. However, if your fixed-rate period is due to end within the next 6 months then we recommend getting some professional advice which will alleviate any concerns you do have.

If you’re on the Standard Variable Rate, then you are free to move onto a new product whenever you like. Whereas tracker or discount mortgages could still carry a penalty for switching early.

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