The next opportunity for a change in interest rates is just around the corner, with the Bank’s monetary policy committee meeting on 2nd November.
Predictions of a 0.25% increase in the bank rate are rife, having been fuelled by the Governor of the Bank of England, Mark Carney, stating that he expects an interest rate rise in the ‘relatively near term’.
But what impact will an interest rate have?
An interest rate rise of 0.25% will take the bank rate up to 0.5%, which is still a historically low figure. Existing borrowers whose mortgages are directly linked to the bank rate will see an instant increase in monthly repayments. For example, for those with a tracker mortgage linked directly to the Bank of England (BOE) rate, for every £50,000 of borrowing on a 20 year repayment mortgage, the interest rate change today would rise their payment increase by £6 per month*.
These predictions have already seen lenders withdrawing some of the lowest rates on the market and a rate rise could have a further impact on product availability. So if you’re currently on a standard variable rate or your current deal is about to come to an end, it may be worth reviewing your mortgage needs with an adviser.
