With a lot of uncertainty around whether the Bank of England will increase the base rate in the near future or not, some borrowers are worried about the effect this will have on their monthly repayments. However, research from moneyfacts.co.uk shows that any interest rate rise will have a minimal effect on the interest that is being charged on their mortgage ‘so there is no need to panic’.
Charlotte Nelson, finance expert at moneyfacts.co.uk, said: “A key member of the Bank of England has suggested that the time has come to start considering a ‘modest’ base rate rise to curb the effects of rising inflation. The thought of an imminent rate rise will be causing some borrowers to panic, particularly those who have become accustomed to low mortgage rates and repayments.
“However, a small increase of 0.25% will have a relatively small impact on interest repayments. (Our research) shows that even those sitting on the average SVR of 4.60% will only see an increase of just £17 in the first instance. This will of course be dependent on where a borrower is in their mortgage journey, with those closer to being mortgage-free likely to see even less of an effect on a 0.25% increase, as they will have already repaid a significant proportion back to the lender.”