Commenting on the increase in the Bank Rate from 1.75% to 2.25%, Paul Broadhead, Head of Mortgage & Housing Policy at the BSA said:

“Another Bank Rate rise, the seventh since December, will be unwelcome news for many homeowners. But with around eight in ten mortgage holders on fixed rates it will take time for these rises to be felt by many borrowers, as they will continue to pay the same each month until their current deal ends.

"When those fixed rates end, most will choose either to re-fix with their current provider or search the market. Whilst rates remain comparatively low, we have seen fixed rates rise sharply since December 2021 and borrowers will need to consider the impact of increasing rates alongside all the other increasing demands on their monthly earnings. Mortgage offers are usually valid for between three and six months, so anyone who has a fixed rate that is due to end in December could consider looking for a re-mortgage now, as further rate rises are anticipated. 

"It’s likely to cost those at the end of a 2 year fixed rate who re-mortgage to a new similar deal around £135 more a month. For those on 5 year fixed rates, their re-mortgage is likely to increase their payments by around £110 a month[^1].

“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 and they will do everything possible to help.”

Ends

Notes

^[1]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 (August 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.