The Bank of England has increased its base rate from 3.75% to 4%, a rise of 0.25 percentage points. For households already watching their spending, this will understandably cause concern. However, the impact on your mortgage depends on the deal you have.
7 out of 8 homeowners with a mortgage are on a fixed mortgage rate, so their payments will remain unchanged until their deal ends. Borrowers on tracker mortgages will generally see repayments increase, while changes to standard variable rates depend on individual lenders. Also, and this will surprise many of you, new fixed mortgage deals do not automatically rise by the same amount, as lenders have been pricing in this increase for weeks in their deals.
For buyers, the sensible next step is to check your monthly budget and speak to a mortgage adviser, whilst for sellers, realistic pricing matters because buyers make decisions based on what they can afford each month.
People still need to move. Getting the price and the finances right remains essential.
