Interest rate rise on the horizon?

Interest rate rise on the horizon?

Interest rates remained at the historic low of 0.1% this month (November 2021) despite many traders believing they would finally increase after having languished at such low levels for a considerable period of time. There has been increasing speculation that rates would rise before the end of 2021, but with no movement this month there is of course still one more opportunity for this to happen before the year is out. And if they do rise, the expectation is that any initial rate increase will be gradual (maybe by 0.15%) bringing the Bank of England (BoE) base rate to 0.25%. However, longer term (i.e. over the next few years), experts predict that base rates could gradually creep back up further beyond pre-pandemic levels. 

So why are rates expected to increase?  

Since the UK lockdown came to an end and the economy reopened there has been a rise in inflation. Many of us will have experienced this first hand when filling up our cars with fuel or doing the weekly shop. The Bank of England target for inflation is 2% but has acknowledged that inflation could peak at 4% or more before settling down again after that. There will be pressure for interest rates to increase. So, the question remains therefore when, not if, will interest rates rise.       

How will my mortgage be affected by all this? 

Depending on the type of mortgage you have, an interest rate rise will affect people in different ways. According to Rightmove, approximately 80% of homeowners have opted for a fixed rate mortgage which means their monthly payments won’t change until it’s time to remortgage. So it’s good news if you are a fixed-rate borrower.  

However, for those on with a variable or tracker mortgage or, if your fixed rate mortgage is ending, monthly costs could be set to increase for these people. 

What can I do about it? 

If you are on a tracker or variable mortgage you could scan the market to see what other mortgages are available. However, there could be early redemption fees you may have to pay to your current mortgage provider. Alternatively, you might find it easier to use a qualified mortgage adviser who can search the market for you to try and find you the best deal that’s most suited to your individual circumstances. 

At Mortgagez, we offer a full mortgage advice service and unlike many, we don’t charge a penny for our service when you go via our portal. 

For an up-to-date view, why not compare and secure the best mortgage deal for you TODAY by completing a quick quote online and seeing how much money you could save.  


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Any guidance and/or advice contained within this document is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. Any technical or regulatory information contained within this document was correct at the time of producing it but as it may be subject to change it should not be exclusively relied upon when making a financial decision. The Financial Conduct Authority does not regulate advice on Buy to Let mortgages. 

Click here to view the source of interest rate information.

Click here to view the source of inflation information.

Article written: Nov 2020 051121 MZ000229 

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