BOE Base rates set to rise to 3.5% - How will it effect you and mortgage rates in general? 11 December 2022 at 5:24PM in Mortgages & endowments 7 replies 496 views

PK_London

It has been heavily leaked to all the press that BOE base rates are set to climb to 3.5% next week

If you're on a tracker or SVR how will effect you? If you're looking to buy or re-mortgage how might it effect your or your decision to buy at all?

mi-key

A half percent raise will make very little difference to anyone. You are talking about around £25 increase monthly per £100,000 of mortgage.

I think most people who have already weathered the increases up to 3% will be fine

ACG

In 2020 around 50% of people tying in to new mortgages were doing 5 year fixed rates. 
By September that had risen to 70%. (Bank of England figures). 

I think it is safe to assume the vast majority of the people are not going to be feeling the rate rises for at least 2 years. 
I did a 2 year fixed rate in 2021 and then paid the ERC and fixed into a new deal in April this year, so some of the people who were doing a 2 year fix last year might have already opted to come out of their deal early. 

Obviously there will be people on the old northern rock deals and similar who are struggling, but I did some research on this earlier in the year and relatively speaking it is only small numbers, not that it matters how many for those people. But I think in the main most people will be ok for a little while. 

mi-key

ACG I agree. It's a shame for those who are are stretched and have their initial cheap deal ending, but there will always be that sort of thing.

I don't think it will make much difference to people looking to buy either unless they are right on the edge of affordability.

I would  be surprised if actual rates increase by very much if anything at all as the lenders already factored all this in 

snowqueen555

mi-key said:

I don't think it will make much difference to people looking to buy either unless they are right on the edge of affordability.

That is a sizable chunk of people and includes myself and all the FTBs.

The interest rate is making a huge difference. My rate I had fixed in at 3% in the summer is so much better than what I'm getting now.

mi-key

@snowqueen555 I know FTBs will be hit hardest, as will people who have overstretched to buy in the first place, but that is always going to be the case sadly.

My comment was in regard to interest rates raising another 0.5% to 3.5% which really won't make that much difference. On a £200K mortgage it is around £50 a month more compared to what it was when it was 3%. If someone is borrowing £200K and £50 a month means they can't afford it, then they probably need to look more closely at their figures...

mi-key

The OPs comment was about people looking to buy as well, if they were looking to buy at 3% base rate, it going up to 3.5% probably isn't going to put people off 

dunstonh

It has been heavily leaked to all the press that BOE base rates are set to climb to 3.5% next week

It hasn't been linked.  Media speculation and opinions do not equate to a leak.