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How to prepare for interest rate rises

The Bank of England is due to announce interest rates on 3 November

How to prepare for interest rate rises

The BoE is due to announce its next decision on interest rates, which will impact household mortgages, on 3 November and many investors think it will either raise them from their current level of 2.25% to 3% or possibly 3.25%, both of which would be much bigger moves than usual.

Interest rates can have an impact on a wide range of areas including mortgages, borrowing, pensions and savings. The Bank of England is increasing the base rate to try and tackle rising inflation (cost of living) which has been attributed to increasing energy costs, higher prices of goods coming from abroad, a buoyant job market and businesses charging more for their products. It is likely that the Bank of England could increase the base rate further to meet their inflation target of 2%. Current UK inflation rate is 9.4%.

It's a wise idea to have a plan in place to deal with any potential interest rate changes. Current forecasts indicate that changes are likely to be small but steady, Moneyhelper (2022) says. Whilst a small interest rate rise may not set alarm bells ringing, several consecutive rises could have a significant impact.

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Some steps you can take to help to manage further interest rate rises on your mortgage

We'd suggest putting yourself in the best possible position and ensuring that you are prepared for future rate rises by acting now, which could potentially help soften the impact. Every person has different circumstances, so we strongly recommend you look at the terms of your mortgage and contact your mortgage adviser to discuss your individual needs and circumstances before taking any further action, to see what would be the most suitable option for you.  

1. Find out what type of mortgage you have

How you’ll be affected by an interest rate rise depends on what mortgage you’re on and when your deal comes to an end. If you don’t know, check your paperwork or with your mortgage provider to find out (Moneyhelper, 2022).

The good news is that if your mortgage is on a fixed rate, your monthly repayments are unaffected. Those with fixed rate mortgages are likely to be affected once they reach the end of their current deal. An interest rate rise could make remortgaging more expensive.

If you have a variable rate tracker mortgage that is linked to the Bank of England base rate, you are likely to see an immediate impact on the amount you repay. Those on a standard variable rate (SVR) could see an increase which is decided by the lender. If you are unsure, it is worth checking your mortgage terms and conditions in your mortgage offer document.

If you are on your lenders SVR, please ensure that you get in touch with us as you could be paying more than you need to be. We can offer a FREE review of your current mortgage situation. So, you have nothing to lose, only possibly save!

For those readers who are still on a variable rate or are coming to the end of their fixed rate period, now is a good time to seek professional mortgage advice and let us talk you through the options available to suit your circumstances.

2. Put yourself in the best possible position

Once you understand the type of mortgage you have, the first step is to work out what you can afford and a good way to do this is to create a budget which can help highlight any areas where you may need to cut your expenditure and identify savings opportunities. Tactics such as building your credit score could help you get a better deal when it comes to securing your next mortgage.

3. Take Mortgage Advice

Depending on your circumstances, there can be measures you can take. It could be that the most apparent course of action is to switch to a fixed-rate mortgage, or if the term of your fixed rate is due to end shortly, you could consider fixing your mortgage rate for a longer period of time.

If you fix your mortgage for a longer time period, for example, 5, 10 years or more, then this could give protection for potential interest rate rises over a longer period of time.

However, it is worth noting that fixing the rate for a longer term, may mean that you’re not able to benefit in any rate decreases in the future.

Whether this is right for you will depend on your circumstances, bear in mind that other deals may come on to the market in the next couple of years and you may not be able to switch to them without incurring hefty early repayment charges.

If you’re looking to remortgage within the next six months, it’s a good idea to start looking now. Lots of lenders’ offers are valid for six months. So, it might be a good option to lock one in now, if this is right for you and your circumstances.

If you are on your lender's standard variable rate (SVR), don't hesitate to get in touch with us as soon as possible, as it means that you could be paying much more than you need to be. 

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The key message at the moment is to act now to help avoid an unwelcome surprise you’re your current product is due to expire in the next 3 – 6 months. You will likely be contacted by your current lender offering advice. As a broker, with access to the whole-of-market. We will assess your current circumstances and search across 100+ lenders, 1000+ products for the most suitable deals that are most applicable to your individual needs. To assess staying with your current lender vs moving to a cheaper deal with another lender. We also have possible tricks up our sleeves to help lower monthly payments.

Arrange a FREE review today. What have you got to lose, but possibly save!

A mortgage is secured on your property, so your home may be repossessed if you do not keep up repayments on your mortgage. There may be a fee payable for mortgage advice.




All the information in this article is correct as of the publish date. The opinions expressed in this publication are those of the authors. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.


Identity Financial Solutions Limited is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority. Number 471900.

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