 hiked its base rate from 4.5% to 5% in June - the 13th time in a row since December 2021. 1 You can use mortgage calculators to work out how much your payments will rise by Credit: Getty The central bank has been increasing the rate to slow runaway inflation , which stood at 7.9% in June . But any rises are usually passed on to mortgage holders meaning you're left forking out more on your monthly repayments. Here's everything you need to know about how interest rates impact your mortgage payments and what a mortgage repayment calculator is. Why are mortgage rates going up? The BoE has been hiking its base rate consistently since December 2021 in a bid to slow inflation. Inflation is a measure of how much any number of goods and services are rising in price. The BoE's inflationary target is 2% and it stood at 7.9% in June , so it means prices are rising much more than the bank wants. Increases in the base rate are reflected in mortgage rates. The bank takes the step in the hopes households have less to spend on everyday essentials. This is then supposed to drive down inflation, or at least that is the desired effect. How much will my mortgage go up? There are a number of websites with calculators that can help you work out how much your monthly mortgage repayments might go up by depending on changes in interest rates. L&C Mortgages' calculator lets you work out what your payments will increase to based on your loan amount, mortgage type, term length, current rate and what it will change to. For example, if you've got a £125,000 loan on a 25-year term at a current rate of 5% and this rate rises to 5.25%, your payments would go up from £731 a month to £749 a month. Meanwhile, if the conditions are the same except your loan amount is £250,000, monthly payments would go up from £){kind=link}
RISING interest rates usually lead to a spike in mortgage rates for households.
The Bank of England (BoE) hiked its base rate from 4.5% to 5% in June – the 13th time in a row since December 2021.
The central bank has been increasing the rate to slow runaway inflation, which stood at 7.9% in June.
But any rises are usually passed on to mortgage holders meaning you’re left forking out more on your monthly repayments.
Here’s everything you need to know about how interest rates impact your mortgage payments and what a mortgage repayment calculator is.