If mortgage borrowers failed to take notice of the December hike in base rate then hopefully the decision to lift rates again will be enough to trigger a reaction, especially as four of the nine-strong Committee favoured a bigger increase.
Homeowners are already digesting the prospect of further increases to energy bills and steeling themselves for higher National Insurance and Council Tax.
Looking for a silver lining, the good news is that they can take some action on their mortgage to pin down their biggest outgoing.
Our Cost of Doing Nothing Calculator will indicate the potential savings that could be made
Standard Variable Rate
The most vulnerable to today’s announcement are those on variable rates, especially standard variable rates (SVRs) which are substantially higher than the rates available on the open market, often more than 4%.
Some but not all lenders have already followed the December increase and so we should expect they will rise again. That could put another £21 per month on a typical mortgage.
Not all lenders have made a change yet though, so we could still see some lenders pass on an aggregate increase to SVR of 0.40% in one move.
Fixed Rates
Mortgage rates have already risen from the ultra-low trough of last year but still offer borrowers substantial savings and a chance to remove any uncertainty by fixing the rate. Fixed rates are likely to remain by far the most popular product and 5-year rates can be found from a little over 1.50%.
However we continue to see a flurry of price changes in the market that has continued to edge many of the lowest rates up.
Many will already be wrapped in the safety of a fixed rate but it makes sense to plan ahead. As deals come to an end borrowers will potentially emerge into a higher rate environment.
Begin the process in good time to make sure a switch to a new deal is smooth and avoids any time on a SVR.
Lender offers can be valid for up to six months, enabling borrowers to secure a rate now even if they are locked in for several months.
David Hollingworth, associate director, communications, London & Country Mortgages
