With inflation expected to remain above the Bank of England’s (BoE’s) target deep into 2023, interest  rates are forecast to rise further still. What can mortgage holders expect for the  coming year?    

Up and down

The effect rising rates have on you depends on your mortgage type. Those with a tracker mortgage will have already seen their rate increase directly in relation to Bank Rate, meaning costlier repayments as soon as the BoE makes a change. 

Standard variable rates (SVRs) also rise (or fall) in response to the BoE’s decisions.  But SVRs can change at any time because they are set by the lender rather than simply tracking Bank Rate. 

Shielded – for now

Fixed rate mortgages, on the other hand, are protected – for now. If you are on a fixed rate, that means you won’t see any changes in your mortgage until your current deal ends. 

At the end of your fixed-rate deal, you will automatically be switched to your lender’s SVR or a reversionary rate, which could prove expensive. So, it’s a good idea to consider your options well before the end of your fixed term. 

Should I remortgage now?

If you’re in the last six months of your current mortgage deal, it might be worth locking into a fixed rate mortgage now. By locking into a mortgage deal before your current one expires you can avoid rolling onto your lender’s default rate. However there may be a penalty for leaving your current deal early. 

We can help find the most suitable option for your unique circumstances.