Biggest interest rate increase in 33 years

After the Bank of England’s Monetary Policy Committee (MPC) voted to increase Bank Rate to 3% in early November, households across the country are feeling the effects of pricier borrowing.

Going up

The rise of 0.75 percentage points, an eighth consecutive increase and the biggest since 1989, has a significant impact on borrowers. Future rate rises are still anticipated at the next MPC meeting on 15 December and until the end of 2023 – so there could be more pain to come.

To fix?

If you’re on a fixed-rate deal that is due to expire, the options might look drastically worse than last time you remortgaged. Fixed-rate mortgages have the advantage of sheltering you from future rate hikes, though the new deals might not seem like much of a respite. Indeed, the average five-year fixed rate is currently 5.95%, lower than the rates seen throughout October but significantly higher than a year ago.

Or not to fix?

The average Standard Variable Rate (SVR), meanwhile, is 5.86%. An SVR is the rate to which you’ll default when a deal comes to an end and, unlike a fixed rate, it changes along with Bank Rate. As such, these rates are likely to keep rising for the next year.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.

29 December, 2022

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