Martin Lewis discusses variable-rate mortgages on GMB
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The Bank of England is due to announce whether it will hike interest rates and how much by this lunchtime. A predicted jump of 0.75 percent would take the borrowing rate from 1.75 percent to 2.5 percent, and would be the largest rise in three decades. The expected hike is already influencing borrowing rates at major banks, with Santander, HSBC, and NatWest already increasing interest on fixed mortgages before the announcement has landed. Lewis Shaw, of broker Shaw Financial Services, said: “Borrowers should buckle up.
“The writing is on the wall for a significant Bank Rate rise and lenders have preemptively hiked rates, because they don’t want to get caught short scrambling to re-price their deals.”
Jiten Varsani, of London Money Financial Services, said: “Sudden and multiple large rate increases over a short period mean even those who have planned ahead and built emergency funds are going to struggle.
“One client has seen a £310 increase in monthly mortgage payments, along with a £250 increase across other expenses such as utilities, groceries and fuel.
“It means an additional £6,720 each year that they longer have to spend elsewhere or save.”
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What is an interest rate?
An interest rate is the cost of borrowing money from a bank or other form of lending.
When you borrow money, you’ll pay back the original amount loaned plus the interest.
Interest can also be earned on your savings.
This means if you put money into an account with an interest rate, you will be rewarded with the set percentage of what you put in from the bank.
Good morning from London. I’m Aliss Higham, I’ll be bringing you all the latest developments on the Bank of England announcement today. Please feel free to get in touch with me as I work if you have a story or tips to share! Your thoughts are always welcome.
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