Interest rate rise... should I worry?

Interest rate rise house image

On Thursday 2 August, the Bank of England raised its interest base rate for only the second time in a decade, from 0.5% to 0.75%.  Interest rate rises are usually a sign of resilience in the economy and mortgage rates still remain at a competitive levels with savings rates also likely to increase.

How will it affect me?

At the moment, around 57% of all borrowers are on fixed rate details so they will not be affected immediately by the rate increase.  For the 43% of homeowners on variable or tracker rates, most of them will see their mortgage repayments rise when the Bank of England raises rates.

Most of our purchasers at our affordable housing development opt for fixed rate products for two reasons:

  1. They want to know what their outgoings will be and budget accordingly
  2. These are widely available from bigger lenders from Halifax and Nationwide, particularly for first time buyers

Channel 4 news recently interviewed one of our new homebuyers, David Cooper.  David bought a new three bedroom ‘Oak’ home at our Baron’s Vale development in the Glasgow’s East End and paid £157,000.  David is currently on a fixed rate mortgage but if he was on a variable mortgage, the difference would be an additional £20 per month.

David told Channel 4 News “I got a very good rate on my mortgage deal so I’m really comfortable that once my fixed rate is finished, even if I go on to a variable rate, it won’t make much difference to what I’m paying at the moment.”

Watch the Channel 4 news feature here

https://www.channel4.com/news/what-does-interest-rate-rise-mean-for-mortgage-holders

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