Base Rate Rises: How Remortgaging Could Protect You

You’re probably aware of soaring energy bills and the pressure that will put on your household finances but did you know base rate rises to the Bank of England base rate could also mean you’ll have to shell out more each month?

That’s because when the base rate increases it may mean you’ll have to pay more eac month for your mortgage, depending on the type of mortgage you have. And if you’re looking for a fixed rate mortgage you’ll find rates on these are increasing too.

That’s why we’ve put this article together to explain what the base rate is, how the increase could impact your mortgage and how to protect yourself.

The Bank of England voted to raise the base rate of interest to 0.75% on the 7th of March. This was the third increase since December 2021 when it stood at a record low of 0.1%.

Broadly speaking, an increase in the base rate will make borrowing more expensive.

How an increase in the base rate will impact you will depend on what type of mortgage you have.

• Tracker mortgages: If you’re on a tracker mortgage and the base rate increases your monthly payments will rise.

• Fixed rate mortgages: If you’re on a fixed rate deal you will only see a change in the amount you pay each month when your deals ends.

•  Standard Variable Rate: While if you’re on the Standard Variable Rate, the rate you’ll pay can change at the lender’s discretion. So the lender can pass the full increase on, some of it, or none of it. Also if your lender wanted to they could increase the rate by more.

Noone can predict this with 100% accuracy but experts believe it’s very likely we’ll see another rate rise this year. In fact some are predicting the base rate could rise to between 1.5% and 2% by the end of the year.

This will depend on your circumstances but with all the signs pointing to rates rising further i may be worth considering remortgaging now, especially if you’re coming to the end of your fixed deal or if you’re on a tracker mortgage.

• Move fast: With each base rate rise we’ve seen lenders pulling their best deals. So if you want to remortgage it really is a case of grabbing a deal before its gone.

• Get advice: As speed is of the essence, speaking to an expert adviser could be more important than ever. This is because a mortgage adviser can search through thousands of mortgages to find the right one for you – not only will you get the benefit of expert advice but you’ll save time too.

• Check any charges and fees: However when you’re remortgaging you should watch out for any early repayment charges or exit fees to switch. You should also factor in other costs like an arrangement fee. But don’t let the idea of fees put you off looking. By speaking to an expert adviser they’ll run through the numbers with you and you may find that it’s cheaper in the long run to remortgage even if you have fees and charges to pay.