The Bank of England just increased the Base Rate: What does this mean for your mortgage payments?
Date: 23rd March 2023
Author: Prospect Tree Mortgages
The Bank of England‘s Monetary Policy Committee (MPC) recently announced that the base rate has been increased to 4.25%. This news has raised concerns for many homebuyers and those looking to remortgage their property. In this article, we will discuss what the base rate is, why it has increased, and how it will affect your mortgage. We will also provide guidance on what you should do next.
What is the Bank of England Base Rate?
The Bank of England Base Rate is the interest rate set by the Bank of England’s MPC. This rate influences the interest rates charged by banks and building societies for mortgages and other loans. The MPC meets every month to decide whether to increase, decrease or keep the base rate the same. The base rate is a critical tool used by the Bank of England to control inflation and maintain financial stability.
Why Has the Base Rate Increased?
The main reason for the recent increase in the base rate is due to concerns about rising inflation. Inflation occurs when the prices of goods and services rise over time, leading to a decrease in the value of money. The MPC’s role is to keep inflation low and stable, and increasing the base rate is one of the tools used to achieve this goal.
How Will the Base Rate Affect Your Mortgage?
If you have a variable rate mortgage, your interest rate will likely increase, and your monthly mortgage payments will go up with it. If you have a fixed-rate mortgage, your payments will not be affected during the fixed-rate period, but you will likely face higher payments when you come to remortgage. This rate increase will affect both new and existing borrowers.
What Should You Do Next?
If you are still within your fixed-rate period then you don’t have to do anything. Although, if your fixed-rate is expiring within the next 6 months then we would strongly advice you get in touch with us for a quick and easy rate review. Doing so means you could secure an interest rate for your renewal now, and protect yourself from any future rises.
If you’re currently on a variable rate mortgage, then you should also get in touch as we can likely save you money on your monthly mortgage repayments.
If you’re not sure what type of mortgage you are on, or you are concerned about the impact of the base rate increase on your mortgage then please contact the friendly experts at Prospect Tree Mortgages who can offer you the reassurance you need.
Prospect Tree Mortgages can help you find the best mortgage available to you and your unique circumstances. This will help put you in a strong position to negotiate the purchase of your new property. We’ll take care of all the communication between the estate agents and solicitors to ensure your process runs smoothly and without stress or frustration.
We’ll help you quickly and easily review your current mortgage product. Offering you advice and recommendations on any preferential rates which may be available to you. We’ll take care of the entire transaction, providing you with updates as you move onto your new mortgage product. If you want a stress-free remortgage experience then get in touch us.
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