Bank of England interest rise: How will it impact fixed, variable, tracker, SVR mortgages? | Personal Finance | Finance

Providing an example, Ms Coles said: “If you have a £250,000 mortgage over 25 years, at the Moneyfacts average mortgage rate of 5.4 percent, and the full rate was passed on, it would mean a rise in monthly mortgage payments from £1,520 to £1,643 – so you would need to find another £123 a month.”

Standard Variable Rate (SVR) mortgages

Ms Coles said: “For anyone whose fixed rate deal has come to an end who decided to revert to the SVR and wait to see what happens to fixed rates, it could end up causing the kind of headaches you may have been trying to avoid.

“A Standard Variable Rate (also called a reversion rate) is the highest rate from a mortgage lender and is what you’ll fall onto once your fixed rate deal is up.”

However, Ms Suter said: “[SVRS] generally go up as Base Rate rises, but not as quickly as with a tracker rate. The mortgage lender will decide whether to increase these rates and will give notice before they do.”

Responding to the increase, Adrian Anderson, director of property finance specialists, Anderson Harris said: “This will be a blow to circa 1.5 million variable rate mortgage holders (circa 20 percent of borrowers) who will see a significant increase in their mortgage payments.

“There is a glimmer of hope, however, as we appear to set sail for calmer seas. It is expected that future Bank of England Base Rate rises will be more modest than what is already priced into current fixed-rate mortgages hence we are not expecting to see new fixed-rate pricing increasing in line with the Base Rate.

“The news today will be painful for many, however, it should not be a surprise. At one stage after the mini budget analysts were factoring in the Bank of England Base Rate peaking at circa six percent. Some analysts now predict the peak will be circa four percent.”

How can borrowers keep mortgage repayments down?

Kellie Steed, mortgage expert at money.co.uk commented: “Those whose fixed-rate mortgage is coming to an end soon may want to consider changing their deal early to take advantage of interest rates before they increase.

“However, remortgaging before your current deal ends could mean you’ll need to pay early repayment charges (ERC). You should compare the cost of the ERCs to how much you think you could save by remortgaging, to ensure that switching early is worthwhile.”