What today's Bank of England rate rise means for mortgages - Mortgage Professional America
By Google News Personal Finance ·
Industry figures warn UK tracker holders face immediate challenges, while the fixed-rate outlook is more nuanced
The Bank of England's (BoE) decision to raise Bank Rate by 25 basis points to 4.0% — its first hike in more than three years — has landed at a testing moment for the UK mortgage market. The move was widely anticipated by financial markets and mortgage professionals alike, with two-thirds of brokers surveyed by Mortgage Introducer expecting the hike ahead of the announcement.
With fixed-rate products already approaching 6% and mortgage approvals at a near three-year low, the question is not just what this decision means today, but what comes next.
For the roughly 1.4 million UK homeowners on tracker and variable-rate mortgages, the impact is both swift and tangible. Adam French, head of consumer finance at Moneyfacts, put the numbers plainly:
"The rise in Base Rate to 4% is unwelcome news for tracker mortgage borrowers across the country, who could see their monthly repayments increase almost immediately. For someone with a £250,000 mortgage over 25 years, a 0.25 percentage point increase adds around £37 a month to their repayments."
Standard variable rate (SVR) borrowers face similar exposure, with lenders widely expected to pass through the full increase within weeks.
Simon Webb, managing director of capital markets and finance at LiveMore, flagged that for older borrowers the pressure can be particularly acute:
"For older borrowers, the impact of higher rates can be particularly acute when refinancing on a retirement income, where there may be less scope to absorb higher payments. Many are balancing mortgage commitments against rising household costs, while others still need to borrow later in life to support their changing circumstances. This makes…
Originally published by Google News Personal Finance
