The startling amount your mortgage could go up by – starting from now | Personal Finance | Finance
This is the first time the central bank has raised the rate since the start of the coronavirus pandemic, throughout which it has remained at a historic low of 0.1%. Official figures showed inflation hit 5.1% in November amid soaring energy prices and bottlenecks in the global supply chain, hitting a rate that the Bank did not expect. ‘did not expect to reach before spring.
The news will affect mortgage holders across the UK, with a mortgage broker warning of a significant increase in payments.
Trussle calculated that the increase could add up to £ 324.48 to the average mortgage each year.
This comes to an additional £ 27.4 per month.
The financial blow will hit those on standard floating rates, which will now rise in line with Bank of England changes.
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Miles Robinson, Mortgage Manager at Trussle, told Express.co.uk: “Over the past year house prices have grown at a record high. But while it is positive that house prices remain high, we have to deal with what is shaping up to be a tough winter for household finances.
“Families are facing a sharp increase in energy bills, as well as an increase in the cost of living in general.
With interest rates on the rise, now is the time for people to start looking at their spending and mortgages are the perfect place to start.
Mr. Robinson said: “Every owner has one, but many don’t understand how much they can afford by not having the right product for them.
“If the current level of inflation turns out to be more than just a temporary phenomenon, today’s rate hike could be the first in a long series.”
“It is important that UK households are prepared for the impact of interest rate hikes on their budgets.
“After weekly grocery and energy bills, mortgage and credit card payments could be the next items to get more expensive. “
Mazars explains that the majority of the increase in interest payments would be due to variable rate mortgages.
UK borrowers currently have £ 296 billion in adjustable rate mortgages secured against their homes, at an average interest rate of 2.33%.
Mazars says the amount owed would be even higher – but a wave of borrowers have switched from variable-rate mortgages to fixed-rate loans in recent months after warnings of the upcoming rate hike.
Mr Rouse adds: “The majority of UK mortgage borrowers are fairly well protected against rising interest rates, at least in the short term.
“Most won’t feel the pain right away, but will likely face a rate hike the next time they remortgage.”
Further increases in the base rate would have an even more dramatic impact.
If interest rates were to rise another 0.25%, according to other Mazars calculations, household interest payments would rise another £ 917million.
Interest payments are expected to increase further with the rate of inflation in 2022.
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