Today 3rd November 2022 has seen another interest rate increase of 0.75% taking Bank Of England Base Rate to currently 3% – it’s seventh of the year and the biggest hike in 33 years. The Bank’s monetary policy committee meets eight times a year to decide interest rate policy so we are expecting a further interest rate increase by the end of 2022 … Mortgage rates are on the rise and are likely to keep rising. Unfortunately, this does have an effect on mortgages depending on the type you currently have.
If your current fixed rate ends within the next 6-12 months here’s why you should consider a mortgage review now …
For those on a fixed-rate mortgage, changes in interest rates will not apply during the period your rate is fixed. When a fixed mortgage deal ends, you’re normally automatically reverted to the lender’s SVR, however, SVR rates are usually higher than previous fixed rates and so your monthly mortgage repayments will increase as rates are predicted to rise.
For those on a variable-rate mortgage, such as a tracker, standard variable rate (SVR) or a discounted deal, there will be a significant impact resulting in an increase in mortgage repayments. Tracker mortgages are aligned with the Bank of England’s movements, whilst discounted mortgages are determined by your lender and based on their Standard Variable Rate (SVR). The SVR is not explicitly linked to the Bank of England’s base rate but is likely to be influenced by it.
If your fixed rate is coming to an end within the next 6-9 months you may want to consider taking advantage of a whole of market mortgage review with Be Mortgages. Most new mortgage deals in the UK are valid for six months but Be Mortgages can actually look to reserve you a new rate up to 9 months ahead of your current fixed rate expiring enabling you to take advantage of interest rates before they increase even more. The new interest rate will not start until the day after your current fixed rate ends which allows you to secure a rate and switch when your deal comes to an end, avoiding an Early Repayment Charge (ERC).
For those not quite in this remortgaging window, remortgaging early could still be a better option in the long-run – but it’s important to consider all factors before taking the plunge. Remortgaging before your current deal ends could mean you’ll need to pay an early repayment charge (ERC). But Be Mortgages will compare the cost of the ERC to how much you could save by remortgaging early, to ensure that switching early is worthwhile.
Bank of England interest rates also influence the interest charged on things like credit cards, bank loans and car loans. Even ahead of this latest rise, the average annual interest rate was 20.23% on bank overdrafts and 18.56% on credit cards in June. Lenders could decide to increase these fees now that interest rates have risen. Raising additional funds on your mortgage to consolidate your credit cards and loans at a lower interest rate may also be a good idea. Contact Be Mortgages for your FREE mortgage review TODAY.