How has the Bank of England rate rise affected mortgages?

Some 715,000 mortgage holders on tracker rates have seen payments rise by an average of £588 a year following the latest Bank Rate rise.1 A further 895,000 on standard variable rates (SVR) will see yearly increases of £370.

Monthly rise

The Bank of England (BoE)’s Monetary Policy Committee (MPC) increased Bank Rate again in February. Now at its highest level since the 2008 financial crisis, Bank Rate is pushing repayments higher for many mortgage holders.

Standard Variable Rates remain high

The average standard variable rate at the start of March of 7.12% is already at its highest point since 2008.

On average, homeowners with tracker deals are facing mortgage repayments £382 higher than they were in December 2021. For mortgage borrowers on Standard Variable Rates (SVRs), the equivalent increase will amount to £240 a month.

To fix or not to fix?

In the context of rising rates, the certainty offered by fixed-rate deals can seem more appealing. Having a fixed-rate deal offers a guaranteed interest rate, which means monthly payments will be the same from the start to the end of your term.

Overall, there is a positive momentum within the mortgage market as lenders compete on price, and we may well see more reductions in the weeks ahead on fixed rate deals.

All average fixed rates edged lower this week, Moneyfacts data shows, despite the Bank of England raising the base rate by 25 basis points to 4.25%. The average rate for a two-year fix slipped by 5 basis points to 5.29% this Friday, while the average rate for a three-year fix fell by 7 basis points to 5.13%. Among longer terms, the average rate for a five-year fix was 4 basis points lower at 4.94%, while the average rate for a 10-year fix was 3 basis points down at 5%.

1UK Finance, 2023,

Your home may be repossessed if you do not keep up repayments on your mortgage