What is the Base Rate?
The base rate, or base interest rate, is the interest rate that a central bank – like the Bank of England or Federal Reserve – will charge to lend money to commercial banks. The Bank of England Monetary Policy Committee voted on 2 February 2022 to increase the Bank of England base rate to 0.50% from 0.25%. HMRC interest rates are linked to the Bank of England base rate. As a consequence of the change in the base rate, HMRC interest rates for the late payment will increase.
What does this mean for mortgages?
Most people want to know what this increase means for themselves, their family and their own personal finances. If you own your own property, there are two outcomes:
If you are in a fixed rate mortgage deal, this increase will not have an effect on you in the immediate future. Your monthly payments will stay the same. It may have an effect further down the line when your deal comes to an end and you need to renew. At that that time, when you come out of your fixed rate deal, rates may be a little bit higher, so when you look to re-fix in at that point, whether it’s a 2, 3 or 5 year deal things could be a little bit more expensive. But exact figures are unknown.
If you’re on a tracker deal, your mortgage will rise slightly in line with the base rate increase. Your monthly mortgage payment will increase as of your next payment. If you’re on a tracker mortgage, could be a good time to discuss moving onto a fixed rate mortgage, but it completely depends on your circumstances and whether it’s right for you.
Contact Mortgages2Go
If you’d like to discuss your current mortgage or are coming to the end of your fixed rate mortgage and are looking for some advice for the next step, please do not hesitate to get in touch. go2mortgages are a family business based in Cheltenham, based on 34 years experience. We provide advice on mortgages and insurances to clients nationally across all of the UK. Reach out to Liam, Phil or any one of our team on 01242 237866 or email on liam@go2-mortgages.co.uk , phil@go2-mortgages.co.uk
