And banks will be falling over themselves to pass the rise on to mortgage customers before the ink dries on the Bank of England announcement. In fact, Halifax fell on its own shoelaces and accidentally announced its rise before the Bank of England’s decision. If you’re one of the 1.1 million people with a standard variable rate mortgage or one of the 850,000 people with a tracker, your costs will go up.
Someone with a £300,000 repayment mortgage over 25 years on the average SVR could see their monthly payments increase by more than £40 a month.
And while, taken in isolation, it doesn’t seem like an impossible stretch, the steady rise in rates since December will take its toll.
The combined impact of four increases in five months is catching up with us.
The Bank of England predicts that the purchasing power of our income will fall by 1.75% over the course of the year, leaving us all struggling, and life will become even more difficult for borrowers.
Three-quarters of mortgage holders are protected by a fixed-rate mortgage, but even though they will reap the benefits during the fixed period, it means they will feel the impact all of a sudden. expiration of their mortgage.
If you have six months or less left on your current mortgage contract, you can apply for a remortgage rate today and make a deal in case rates rise again.
If you have more time before your repair is complete, you have time to plan how you will cover the additional costs. Ideally, you’ll be able to spot costs to cut elsewhere in your budget, to free up more money for your mortgage.
Meanwhile, the costs of credit cards and new loans will continue to rise, so anyone who borrows to stay on top of rising prices will pay an even higher price.
For savers, on paper, the rate hikes are excellent news.
Unfortunately, someone has to tell the big banks about this, because they are dragging their feet in passing on these rates.