With the recent Bank of England base rate rise now may be a good time to re-evaluate your circumstances and assess your mortgage options and requirements.


From a mortgage point of view, if you are already on a fixed rate the base rate rise from 0.5% to 0.75% will have no effect on you in the short term.  Those most effected will be those on either the standard variable rate or a tracker / variable / discount rate.


Now if you are on a tracker / variable / discount rate the base rate rise will see your monthly mortgages costs increase within the next month or so.  The majority of borrowers on these types of mortgage deals will have had such low mortgage payments over the past few years previously could not be bettered by a fixed rate.


You may find out what your new monthly payment will be and think that this is not so bad, however with the two rate increases relatively close together (in comparison to rate changes in the past) it could be speculated that rates could rise again.  There is no guarantee if or when this is going to happen but after having a number of years of record low interest rates a further increase down the line would hardly come as a surprise.


Additionally the gap between the interest rates of fixed rate mortgages and tracker / variable / discount mortgages have never been closer.  Yes the fixed rates are slightly higher than most of the tracker rates but it is really quite slight at the moment.  Paying that little bit extra for extra security of payment is something that should be considered by many, especially those who would be greatly affected by any further increases.


If you are on the standard variable rate you are not even benefiting from the low interest rates we have had in the recent past, as typically a standard variable rate is between 4- 5% for a lot of lenders.


If you are on the standard variable rate of your mortgage provider or on a tracker / variable / discount rate I would suggest speaking with an independent mortgage adviser to go over your options as you could make considerable monthly savings.


Daniel Brown BSc (Hons), Cert SMP

13th August 2018

Base rate rise – time to re-evaluate your circumstances?