In December the Bank of England announced that the base rate was increasing from 0.10% to 0.25%. It was originally cut in March 2020 at the start of the COVID-19 pandemic to help the economy during a period of uncertainty. Up to that point the base rate was 0.75%.
At present, there is no indication of how long the base rate will stay at 0.25% as policymakers at the Bank of England decide on the increases in line with the rate of inflation to help keep price rises under control. However, this will impact some homeowners and they will likely be keen to save money as there have been predictions that the base rate will continue to rise in 2022.
We have been experiencing a period of cheap mortgages and mortgage brokers are predicting that an increase won’t impact mortgages overnight, and some might not even be affected at all.
For example, 74% of mortgages are fixed-rate so the increase will not be noticeable while still in their current term, explains UK Finance. Although, the change will impact their repayments after this period.
Approx. 1.5 million fixed-rate mortgages will be expiring in 2022, and a further 1.5 million in 2023, meaning that there may be a lot of homeowners shopping around for new deals over the course of the next two years.
The remaining 26% who are on tracker mortgages will likely be impacted by change immediately. This may also lead to an increase in enquiries from homeowners on a tracker mortgage as they could look to change lenders when their term ends.
If you are in the property industry and need help with work brought about from the base rate increase, please speak to our team. We are all knowledgeable property industry professionals, familiar with specialist terminology and able to offer fast turnaround.