Some 715,000 mortgage holders on tracker rates have seen payments rise by an average of £588 a year following the latest Bank Rate rise1. A further 895,000 on standard variable rates (SVR) will see yearly increases of £370.
Monthly rise
The Bank of England (BoE)’s Monetary Policy Committee (MPC) increased Bank Rate again in February. Now at its highest level since the 2008 financial crisis, Bank Rate is pushing repayments higher for many mortgage holders.
On average, homeowners with tracker deals are facing mortgage repayments £382 higher than they were in December 2021. For mortgage borrowers on SVRs, the equivalent increase will amount to £240 a month.
To fix or not to fix?
In the context of rising rates, the certainty offered by fixed-rate deals can seem more appealing. Having a fixed-rate deal offers a guaranteed interest rate, which means monthly payments will be the same from the start to the end of your term.
The ability to plan your budget is a benefit of fixed-rate deals, though your monthly payments won’t fall if interest rates do. With financial conditions posing a challenge to many, fewer people are taking out mortgages. Indeed, approvals dropped to 753,946 in 2022, an annual decline of -20.2%2.
Your home may be repossessed if you do not keep up repayments on your mortgage
1UK Finance, 2023, 2Octane Capital, 2023
https://www.msn.com/en-gb/money/other/misery-for-millions-as-mortgage-payments-rise-588-a-year/ar-AA170STE?ocid=FinanceShimLayer https://www.propertyreporter.co.uk/property-market-turbulence-sees-mortgage-approvals-slide-by-20.html
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