Mortgage rates go up this month
If you’re on a variable rate deal, it’s likely you’ll be paying more for your mortgage from this month.
Banks started to announce hikes to their variable mortgage rates in the hours after the Bank of England base rate went up from 0.5% to 0.75% on 2nd August.
A handful of providers, including HSBC and RBS, increased their base rate tracker mortgage rates by 0.25% immediately, while other brands such as Lloyds, Halifax, Santander and TSB said rates would change from 1st September.
Most standard variable rate (SVR) customers will also be worse off as 60% of providers have increased their SVR since the Bank rate rise, and more are expected to follow, according to data firm Moneyfacts.
Only two providers – Bath Building Society and Principality Building Society – passed on less than the 0.25% rise and only Yorkshire Building Society has said it won’t be increasing its SVR at all.
What should borrowers do?
The message for borrowers sitting on a SVR is to consider remortgaging and opting for a fixed deal.
Moneyfacts finance expert, Charlotte Nelson, said: “Many providers had already priced the rate rise into their fixed rate mortgages in the lead up to the announcement, as they are aware that a rate rise causes many borrowers to reassess their deal. Therefore, lenders have held off from increasing rates further in a bid to attract these borrowers who are now considering remortgaging away from their SVR.
“Any borrower who is sitting on their SVR should do just that, as they could save £250.35 (based on a £200,000 mortgage) a month or £3,004.20 a year by simply switching from the average SVR (4.84%) to the average two-year fixed rate (2.53%).
“The ball is now rolling for base rate rises, with at least a quarter-point rise expected in the foreseeable future. Borrowers now shouldn’t rest on their laurels and should opt for a fixed deal to protect themselves against any future rate rises.”