Will the rise of the base rate affect my mortgage?

You may not be aware but as of the 2nd of February 2023, the Bank of England increased the base rate again, from 3.5% to 4%!

The Bank of England has slowly increased the base rate since December 2021 to tackle the levels of inflation. In just over two years, the base rate has increased from 0.01% to 4%. The highest it’s been in 14 years.

But you may wonder will the rise of the base rate affect my mortgage? Well, we have come up with some information on what will happen to your mortgage now the base rate has increased again.

It all depends on what deal you are on, if you are on a Fixed rate deal, as the name suggests, rates – and the amount you pay – WON'T change during the fixed period. However, the base rate can affect new fixed deals if your mortgage is coming to an end.

Even though the base rate is increasing the interest rates are slowly falling from what they have been the last couple of months. The typical two-year fixed rate mortgage has gone down from 6.65% to 5.45% and with a five-year fixed rate, the rate has fallen from 6.51% to 5.20%.

If you are on the standard variable rate or discounted rate, these don’t necessarily follow the base rate, although they are influenced by it, so depending on what happens with the base rate, it can either increase or decrease.

However, the tracker rate does follow the base rate, so if you are on this deal, the interest rates increase meaning your monthly payments will increase as well.

If you are on a tracker rate and worried that you are not on the best deal, then you can give us a call. At The Money Partnership, we will try and help you and give you advice on what is the best option. If you are unsure what to do or if you want to change to a tracker mortgage, then you can come in to have a chat with us. We can advise you on the current rates available on your current personal circumstances.