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Will Mortgage Rates Go Up In 2022?

LATEST NEWS | 16.10.2021

As house prices reach new highs and the UK’s rate of inflation rises, it’s only a matter of time before mortgage rates follow suit. Andrew Bailey, Governor of the Bank of England, believes interest rates on mortgages would likely increase early next year. But what will the 2022 mortgage rate increase mean for you? 

What happens to my mortgage if interest rates increase?

Predicting how your mortgage repayments will be affected by an interest rate increase really depends on what type of mortgage you have and the date your current deal will come to an end.  If you have a variable rate tracker mortgage (which follows the base rate set by the Bank of England), you are likely to see an immediate increase on your mortgage repayments if interest rates rise. When on a standard variable rate mortgage, the amount your rate increases in line with any interest rate rise is decided by your lender. You should double check your mortgage terms and conditions to get a better understanding of how much extra you’ll be paying each month. And if you’re on a fixed rate mortgage, you’ll find the rise in interest rates will make an impact once you reach the end of your current deal, potentially making remortgaging more expensive. 

Why are mortgage rates going up?

Though mortgage rates have been at a record low since March 2020, they are soon set to increase from the base rate level to keep up with the UK’s rising rates of inflation. It has been reported that base rates will likely rise to 0.5 percent in the early transition and go up to as much as 0.75 percent by the end of 2022.

Managing an interest rate rise on your mortgage

If you’re coming towards the end of your mortgage deal, we advise that you act now to secure a new fixed-rate loan. The predicted 2022 rate increase may even happen before Christmas this year, so it’s more important than ever that you take a look at your current deal and consider switching. Though the rise may only be small at first, you need to be financially prepared for further fluctuations. Need more help with mortgage rates? Get in touch with one of our experts at TaylorMade Finance today. They’ll be happy to discuss how the rise in interest rates will affect your mortgage repayments and present the best options for you moving forward.
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