Mortgage borrowers whose deal directly tracks the base rate will see their payments increase by around £49 per month on average, adding up to nearly £600 annually, as a result of Thursday’s base rate hike. The figures, from trade association UK Finance, also showed that a borrower sitting on their lender’s standard variable rate (SVR) will typically see a monthly increase of just under £31, adding up to around £370 per year.
Nearly four-fifths (78%) of residential mortgages outstanding are fixed rates, meaning these borrowers will not see the immediate impact of the Bank of England’s base rate hike on Thursday from 1.75% to 2.25% – the highest level since November 2008. But, if they have been safely locked into their home loan for a while, they may find they get a bill shock when they do eventually re-mortgage.
Tim Bannister, Rightmove’s housing expert, said: “Although the majority of people are on fixed-rate mortgages, there’s a looming concern for those with their terms due to end over the next six months or so as interest rates continue to creep up. It’s likely that those who choose to fix again will find that rates have doubled in some cases since they last locked in, and so despite paying down some of their debt they could find their new monthly mortgage payments are higher, even if they’ve moved into a lower LTV (loan-to-value) bracket and have built up equity.
