Lenders expected to raise rates
Most mortgage lenders are expected to increase the interest rates charged on their mortgages over the next few days, in response to Thursday’s rise in the Bank Rate from 5% to 5.25%.
Many are expected to increase their standard variable rates by the full 0.25%. All tracker products, where the rate paid by the borrow goes up and down exactly in line with the Bank Rate, were effected immediately.
On a £100,000 variable rate mortgage with a 25-year term, a 0.25% increase equates to an extra £15 a month on the repayment. The latest rise comes fairly hard on the heel of a 0.25% increase in November, which itself followed a 0.25% rise last July.
Peter Tutton, at Citizens Advice, said: “We are seeing a rapidly growing number of people falling behind with mortgage payments,and in some cases threatened with repossession.” But the UK’s savers were happy with the news, with a number of savings account providers putting their rates up by 0.25% immediately.