Mortgages
Here’s how rising interest rates could affect mortgage repayments and insurance premiums
There are two types of mortgages - fixed-rate and variable-rate. The type of mortgage you have will affect how rising interest rates may impact you.
Fixed-rate
Most homeowners in the UK (around 83%) have a fixed-rate mortgage, meaning their repayments remain the same over a set period. This means that if you are one of these homeowners, your repayments will not be affected right now, they will only change at the end of the fixed period when you remortgage.
Source: Financial Times - https://www.ft.com/content/750b9ce8-ca4d-41f0-8d44-03f07bb381ff
Variable-rate
If you have a variable-rate mortgage, your repayments will increase as interest rates increase. Rest assured that your mortgage provider will keep you updated as this rate changes.
Whether you are on a fixed-term and looking at remortgaging soon, or you are on a variable interest rate, one of our expert Advisers can help. They will:
- Use their market knowledge and help you work out the right way to factor rising interest rates into how you manage your money
- If you need it, they can discuss options and solutions to help you manage your mortgage payments, such as agreements with lender to government support, which could be available to you
Understanding interest rates
The Bank of England has been steadily raising interest rates over the last 12 months in order to curb the inflation rate in the UK economy, which has reached 10% this year.
One key rate they have increased is the Bank Rate - the amount you are charged for borrowing money, shown as a percentage of the total amount of the loan - which is now at 3%. This rate is factored into variable-rate mortgage repayments your provider will ask you to make.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited 02/02/2023
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