How Bank of England base rate rise to 5% could impact people with all types of mortgage
dailyrecord.co.ukThe Bank of England unexpectedly pushed up interest rates to 5%, the highest rate in almost 15 years, as policymakers and the UK Government come under mounting pressure to control the cost of living crisis.
The move is set to deepen the mortgage crisis as borrowing costs are hiked up for the 13th time in a row.The 0.5 percentage point increase was the sharpest increase since February, surprising economists who had been expecting a smaller hike of 0.25 percentage points.
It follows a higher-than-expected inflation reading in May as continued price rises forced policymakers into action in a bid to bring inflation down to the 2% target.But what does this mean for homeowners in real-terms?
Well, the bulk of mortgaged homeowners are on fixed-rate deals, so they will not immediately feel an impact, although they will feel the ‘pain’ when they come to remortgage.People on tracker mortgages which directly follow movements in the base rate will feel the immediate impacts of the increase.According to figures from trade association UK Finance, a 0.5 percentage point base rate increase will push the average monthly tracker mortgage payment up by £47.43.Homeowners sitting on standard variable rate (SVR) mortgages will also feel the impact if the lender chooses to pass on the base rate increase.
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