Mortgage borrowers on a variable rate will see their monthly repayments jump by hundreds of pounds after the Bank of England hiked interest rates again.
The BoE today today raised the base rate from 0.75% to 1% - the fourth consecutive rise since December 2021, when rates were at 0.1%.
The base rate is what the BoE charges other banks and lenders.
It influences what you’re charged to borrow money, and how much return you get on your savings.
In terms of your mortgage, how the interest rates rise affects you depends on the type of deal you’re on. Here's what you need to know...
What the interest rate rise means for mortgages
If you have a fixed-rate mortgage, your rates won't change - although you may want to consider locking into a cheap deal now if your current mortgage is due to expire.
But if you're on a tracker mortgage and interest rates are hiked, then your rates will go up as these move in line with the base rate.
For those who are on a standard variable rate (SVR) mortgage, it is down to your mortgage provider to decide whether to pass on the increase to its customers.
It is likely your repayments will go up, as most of the major banks and lenders did raise their rates after the last BoE announcement.
You'll usually be on an SVR type mortgage deal after your fix or tracker rate ends.
MoneySavingExpert Martin Lewis today warned how millions of homeowners will pay hundreds of pounds more as a result of the rates rise.
He tweeted: "UK interest rates just gone up 0.25% points to 1%.This will increase variable mortgage costs by c £12/mth per £100,000 mortgage.
"No change for those on fixes (until they end).Savings rates should rise, but banks need to be held to account to ensure it happens."
Mortgage broker Trussle estimates that over three million homeowners benefited from the lowest ever interest rates during the pandemic and stamp duty holiday, and so face paying considerably more under a new deal.
Becky O'Connor, head of pensions and savings at Interactive Investor, said: "Variable rate mortgage borrowers will want to quickly appraise whether they want to stay on their current deal or switch to a fixed, either now, if they can, or when they come to the end of their current mortgage deal.
"Borrowers with fixed-rate deals that end in the next 12 to 18 months may already be worrying about what will be available for them when the time comes to remortgage and what will happen to their monthly costs."
Borrowers should use a mortgage comparison website to check whether you are on the cheapest deal - we've got a guide on how to find the best rates here.
When thinking about the switch remember to factor in any other costs and check if there is an early exit fee associated with your current deal.
Most mortgage lenders will let you take out a new loan three to six months before your current one ends.
