What do rising interest rates mean for your mortgage? Money expert Laura Whateley explains.
announced a £45bn tax-cut package that would rely on heavy government borrowing, the global markets reacted, and the British pound fell to record lows against the US dollar.
If you are on a fixed-rate mortgage that you took out before the latest rate rises, and that doesn’t end for years, you can relax - for now. We don't know what rates will look like in five years’ time. This time last year the base rate was just 0.1 per cent, and fixed rate mortgages often less than 1 per cent. Now it is 2.25 per cent, due to rise further in November, with the best fixed rates around 4 per cent already. Speculation is it will hit 6 per cent next spring.
If you are really worried about how you will be able to afford a mortgage with the new rates, or if your loan comes to an end in 2023 when rates may be higher, always speak to your bank. You may be able to go interest-only, extend your term, or take a mortgage holiday, to reduce your monthly bill or give yourself some breathing space.
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