, your monthly payments are going to go up by quite a whack. A £200,000 mortgage with a 25-year term sitting on an average SVR of 5.86 per cent means mortgage repayments of £1,272 a month. If the lender hikes its SVR by the full 0.75 percentage points, the mortgage rate becomes 6.61 per cent and monthly payments rise by £92 a month to £1,364. If you're on a fixed rate deal, your payments won't change until you need to remortgage. At that point, expect your monthly payments to jump significantly. Moneyfacts data shows the average 2-year fixed rate mortgage in November 2020 was 2.29 per cent, making monthly repayments on the mortgage above £876. The average two-year fixed rate today is 6.47 per cent, taking repayments up by £470 a month to £1,346 per cent. If lenders pass on today's hike, which they will, that would likely see the average two-year fix go up to 7.22 per cent and monthly payments jumping to £1,442. Anyone remortgaging that same loan now, will have to find another £566 every single month to keep up with repayments. Will my overdraft charges go up? The watchdog brought in rules a few years ago, effectively capping overdraft charges. It led to most current accoun){kind=link}
NEWS… BUT NOT AS YOU KNOW IT
The Bank of England has hiked interest rates by 0.75 percentage points, taking the base rate from 2.25 per cent to 3 per cent – the steepest one-day rise in 33 years.
It means interest rates are now at their highest in 14 years, pushing up mortgage costs, rents and rates charged on almost all forms of borrowing.
The Bank of England’s governor Andrew Bailey said households face a “tough road ahead” as central bankers battle to bring inflation down from a 40-year high.
It may help curb the rapidly rising cost of living eventually, but it will pile even more pressure on our finances over the coming months.