THOUSANDS of homeowners are about to see their monthly mortgage repayments go up after the Bank of England hiked interest rates.
The Bank last week increased the base rate of interest for the fifth time in a row, to 1.25%.
Any homeowners with a variable or tracker mortgage will see their monthly repayments rise as a result.
Around 850,000 people with a tracker mortgage will see an immediate rise to their repayments as the products are directly linked to the BoE's rate.
A 0.25% rate hike is estimated to add £30 a month to a £250,000 mortgage with a 25 year term, according to credit app TotallyMoney – or £360 a year.
But even those with a fixed rate mortgage could find their repayments are about to get more expensive, especially if they're looking to lock in to a new deal.
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Many banks are pulling their cheapest mortgage deals as the base rate increases.
According to Moneyfacts, the average two-year fixed mortgage rate has gone up from 2.09% in May 2020, to 3.03% today.
A typical five-year mortgage has gone up from 2.35% to 3.17% over that period.
Halifax Intermediaries will increase rates on a range of its mortgage products by as much as 0.5 percentage points from tomorrow.
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These are the mortgages you can access using a mortgage broker.
Lewis Shaw, founder of Shaw Financial Services, said: "This time last year, Halifax had a two-year remortgage deal available for 0.83% for buyers with a 40% deposit .
"From tomorrow, it will be 3.33% for identical circumstances – it shows how the market can change rapidly."
A two-year fixed rate mortgage for a buyer with a 10% deposit will go up from 3.24% to 3.66% with no fees.
On a £200,000 25-year mortgage, repayments on the lower rate would be £974 a month.
At the new higher rate, they would be £1,018 a month – an extra £528 a year.
A five year fix will increase from 3.26% to 3.76%.
Monthly repayments on a £200,000 mortgage at the new rate would be £1,029.
What you need to do now
If you're already a homeowner, it is worth seeing whether you could lock in your next mortgage deal now.
You're likely to notice that the rates are not as competitive as they used to be – but by historical terms, they're still very low, so it's not time to panic yet.
Jonathan Burridge, founding adviser at We Are Money, said: "When I started in the industry, the interest rate at the mortgage lender where I worked was 15.75%.
"But that is no solace for borrowing looking at reviewing their ultra-low fixed rate deals in 2022.
"Borrowers should look at their options, understand their budgets, and start planning for the next few years."
Mortgage providers will typically let you lock in a new deal three months before your current one ends – and in some cases, up to six months ahead.
This allows you to secure a mortgage before rates rise further, and means you don't have to wait for your current deal to end first.
You can either get a new deal with your current mortgage provider, or shop around to find a different lender offering a better deal.
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One thing to note though, is that often the deal will run from when you agree it NOT when you actually move on to that rate.
If you're staying with the same mortgage provider, however, it may be possible to switch to the new rate earlier – so it's worth asking.
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