Commenting on the increase in the bank Rate from 1.0% to 1.25%, Paul Broadhead, Head of Mortgage and Housing Policy at the BSA said:
“Another Bank Rate rise, the fifth since December, will be very unwelcome news for many homeowners. With around eight in ten mortgage holders on fixed rates it will take time for these rises to be felt by most borrowers, as they will continue to pay the same each month until their current deal ends.
The financial impact of re-mortgaging could be less than people expect, although I appreciate that any increase in monthly expenditure given the rising costs of living will be unwelcome. It’s likely to cost those at the end of a 2 year fixed rate who re-mortgage to a new similar deal up to £80 more a month. For those on 5 year fixed rates, their re-mortgage is likely to increase their payments by nearer £35 a month.
“Lenders are sensitive to the rising number of people facing a squeezed household budget. Anyone who is worried about their ability to pay their mortgage should get in touch with their lender early. Lenders will do everything possible to help.”
Based on a £130k mortgage for 25yr term. It compares the rate on the loan 2,3, or 5 years ago (depending on term) to the one available now (May 2022) on the same basis i.e. assumes 2yr fixed will re-mortgage onto another 2yr fixed at the same LTV and for the same £130k.
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- The Building Societies Association (BSA) represents all 43 UK building societies, as well as seven credit unions. Building societies have total assets of over £477 billion and, together with their subsidiaries, hold residential mortgages over £351 billion, 23% of the total outstanding in the UK. They hold over £328 billion of retail deposits, accounting for 18% of all such deposits in the UK. Building societies account for 40% of all cash ISA balances. They employ approximately 43,000 full and part-time staff and operate through approximately 1,380 branches.