How will the interest rate rise affect my mortgage?

How will the interest rate rise affect my mortgage?

We know that you’re worried about rising interest rates and the impact they’ll have on your monthly mortgage repayments.

That’s why, in this blog, we’ve answered the most frequently asked questions and concerns we’re hearing from our valued clients.

Click below to speak to our team today.

How many times have interest rates gone up?

Interest rates have already gone up six times this year. The most recent rate rise - up 0.5% from 1.75% to 2.25% - happened on September 22nd.

Why have rates gone up again?

Interest rates have been climbing steadily since the start of the year in a bid to slow raising inflation.

Higher interest rates make borrowing money more expensive and, in turn, people spend less money and this brings inflation down.

Will interest rates go up again?

Although we don’t have a crystal ball, it’s highly likely that interest rates will go up again. In fact, the markets are currently working on the assumption that the base rate could rise to as much as 6% by spring 2023.

What does it all mean for my mortgage payment?

If you’ve recently locked into a new fixed rate mortgage you have nothing to worry about for now. Your payment is set for the full-term of the agreement.

If your fixed rate is coming to an end within the next 6 - 12 months there are implications for your payments when your deal ends. More on that later.

If you’re on a tracker or variable rate, your payments will go up immediately.

My fixed rate is ending within six months. What should I do?

First of all, it’s great that you’re on top of things and know when your current deal ends.

 The good news is that many mortgage lenders will let you lock into a new deal up to six months before the end of your agreement and you don’t have to wait for it your current agreement to expire before you act. This means you can potentially benefit from today's rates rather than future higher ones.

If this is something you want to explore, book a free consultation with one of our experienced brokers and we can take care of everything for you.

We’ll contact your existing lender to discuss your options and we’ll also search the entire market to see whether there’s a better deal to be had.

And don’t worry, we’ll double-check again closer to the time to make sure nothing better has come up.

My fixed rate is ending more than 6 months from now. What should I do?

We understand how anxious you must be feeling as one of the 1.8m homeowners whose fixed-rate deal is set to end next year.

The first thing to do is to make a note of the date six months prior to your current deal expiry date. That way you’ll be ready to start looking for new deals as soon as possible.

Usually, we don’t recommend coming out of your existing deal early because the cost of early repayment fees usually outweighs any savings.

However, in today’s climate, this is something you might want to consider and we can help you.

Using our early repayment calculator, we can work out whether you’d be better off sticking with your current deal or whether you could actually save money in the long term by switching.

I’m on a tracker / variable rate. What should I do?

If you’re on a tracker or variable rate mortgage your payments will rise immediately. You should speak to your lender urgently to discuss alternative deals and find out the best options.

At BB Mortgages we can take the stress out of this process by doing it for you. Book a free consultation to get started ASAP.

How much more will my mortgage cost?

As a rough guide, for each 1% rise in your mortgage rate, you’ll pay around £50 a month more per £100,000 of mortgage debt. 

Why are banks withdrawing mortgage products?

In a nutshell, banks are withdrawing their best deals because they’re nervous about the uncertain financial landscape.  

So far, around 300 mortgage products have been pulled and it’s likely more will follow. 

I have a mortgage deal in principle. Will this still stand?

You should check with the lender who has made you the offer but yes, it’s likely that your offer will be honoured.

What should I do if I can’t afford my mortgage payment?

If you’re worried about meeting your monthly repayments, the first thing you should do is speak to your lender. Do not skip or reduce your payment as this will impact your ability to get credit in the future.  

Your lender will tell you the options available to you, for example you may be able to switch to an interest-only deal to bring down your monthly payment.

If you claim certain benefits - such as universal credit - you may also be able to get government support with paying your mortgage interest. You can check your eligibility for Support for Mortgage Interest (SMI) on the government website.

Citizens Advice will also be able to support you.

Got another question about your mortgage?

Call our office today on 01636 674455 and we will do our best to help you.

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