Will my mortgage payments go up?
What are interest rates? How do they affect your mortgage payments?
Shown as a percentage, an interest rate refers to the amount that a bank charges you for lending money, or the amount you can earn on your savings. Mortgage interest rates can change regularly and are heavily influenced by the Bank of England Base Rate. A change in the base rate can impact how much things cost, and therefore the rate of inflation.
What is the Bank of England Base Rate?
The Bank of England Bank Rate is the most important rate in the UK, as it determines the interest rate paid to commercial banks. It is reviewed 8 times per year by the Monetary Policy Committee and influences the rates those banks charge people to borrow money or pay on their savings. It has recently been a popular news item and topic of conversation. From December 2021 to August 2023 the Base Rate increased 14 times in a row from 0.1% to 5.25%! This was in an attempt to curb the rate of inflation.
Different type of mortgages
The two main types of mortgages available are fixed rates and variable rates.
A fixed-rate mortgage guarantees your mortgage rate for a period, most often 2 years or 5 years, although longer terms are available.
With a variable mortgage, your payments can rise and fall with the changing mortgage rates, meaning your payments can increase and decrease during the term.
How do Interest Rates affect my Mortgage Payments?
The lower your mortgage rate, the lower your monthly repayments tend to be.
As of October 2023, the average two-year fixed rate mortgage was 6.06%, up from an average of 1.59% nearly 2 years earlier in December 2021.
As an example, a 30-year mortgage of £200,000:
In December 2021 at 1.59% = £699 per month.
In October 2023 at 6.06% = £1,207 per month.
So what’s happening with mortgage rates now?
The good news is that in August 2023 the base rate was held at 5.25%, which has since seen mortgage interest rates start to settle and decrease. As the housing market remains stable, a trend of steady rate drops is expected for the near future.
To secure the best mortgage, deal we recommend speaking to our mortgage advisor. Please get in touch with us for more details!
The Bank of England Bank Rate is the most important rate in the UK, as it determines the interest rate paid to commercial banks. It is reviewed 8 times per year by the Monetary Policy Committee and influences the rates those banks charge people to borrow money or pay on their savings. It has recently been a popular news item and topic of conversation. From December 2021 to August 2023 the Base Rate increased 14 times in a row from 0.1% to 5.25%! This was in an attempt to curb the rate of inflation.
The two main types of mortgages available are fixed rates and variable rates.
A fixed-rate mortgage guarantees your mortgage rate for a period, most often 2 years or 5 years, although longer terms are available.
With a variable mortgage, your payments can rise and fall with the changing mortgage rates, meaning your payments can increase and decrease during the term.
How do Interest Rates affect my Mortgage Payments?
The lower your mortgage rate, the lower your monthly repayments tend to be.
As of October 2023, the average two-year fixed rate mortgage was 6.06%, up from an average of 1.59% nearly 2 years earlier in December 2021.
As an example, a 30-year mortgage of £200,000:
In December 2021 at 1.59% = £699 per month.
In October 2023 at 6.06% = £1,207 per month.
So what’s happening with mortgage rates now?
The good news is that in August 2023 the base rate was held at 5.25%, which has since seen mortgage interest rates start to settle and decrease. As the housing market remains stable, a trend of steady rate drops is expected for the near future.
To secure the best mortgage, deal we recommend speaking to our mortgage advisor. Please get in touch with us for more details!
The lower your mortgage rate, the lower your monthly repayments tend to be.
As of October 2023, the average two-year fixed rate mortgage was 6.06%, up from an average of 1.59% nearly 2 years earlier in December 2021.
As an example, a 30-year mortgage of £200,000:
In December 2021 at 1.59% = £699 per month.
In October 2023 at 6.06% = £1,207 per month.
The good news is that in August 2023 the base rate was held at 5.25%, which has since seen mortgage interest rates start to settle and decrease. As the housing market remains stable, a trend of steady rate drops is expected for the near future.
To secure the best mortgage, deal we recommend speaking to our mortgage advisor. Please get in touch with us for more details!