Following the Bank of England’s recent decision to hold interest rates at 0.1%, many banks and building societies have decided to raise their interest rates across their fixed-rate home loans.

This decision came as a surprise to many after a rise was expected to happen. However, the likelihood of the Bank of England choosing to raise them up to 1% by the end of 2022 still remains very high.

In response, some lenders have already decided to begin raising their interest rates on home loans following these predictions. HSBC raised their 2-year fixed-rate mortgages from 0.99% to 1.14% on the 4th of November and were closely followed by Nationwide whose 5-year rates of 60% Loan-to-Value (LTV) ratios were also increased from 1.24% to 1.34%. NatWest also announced increases in their mortgage rates that day.

Skipton Building Society also similarly removed their 3-year fixed rates on the 5th of November and Leeds Building Society announced that they were to increase the rate of their mortgages at an LTV ratio of 80 and 85%.

Loan-to-Value Ratio (LTV) is the maximum amount that a mortgage broker would consider loaning you as a percentage of the value of the property you would like to purchase.

These changes will mean that some buyers will have to pay out higher mortgage repayments each month which could be devastating.

Despite the sudden rises, the impact on mortgaged households is likely to be less than what was seen in the 1990s and 2000s due to the increased amounts of fixed-rate mortgages that are apparent in today’s property market.

The changes are also not likely to reverse the recent growth trend that the housing market has seen. Andrew Wishart, Housing Economist at Capital Economics, stated that by raising the interest rate to 1%, it “would only take mortgage repayments up to the long-run average”.

However, as we previously mentioned, the impact this could have on borrowers with little financial leeway could be devastating if they cannot secure a cheaper deal before rates increase even higher.

As a response, it is also being reported that some borrowers are willing to pay charges to end their existing deals early to secure a better fixed-rate deal.

This is not advised and any decision that you make regarding your mortgage should be carefully considered as a failure to pay your mortgage may result in your home being repossessed.

Why not contact one of our Coffey Brooks Mortgage Advisors today who will provide you with unbiased, tailored advice to your situation and guarantee invaluable help in regards to your mortgage? You can contact us on 01255 688400 or email us at info@coffeybrooks.com.

Coffey Brooks are a team of Independent Financial and Mortgage Advisers based in Clacton-On-Sea, Essex and are directly authorised and regulated by the Financial Conduct Authority.