Good Banks for Mortgage LoansMortgage banks are good for mortgages
So while you won't see an immediate modification of your mortgage if you are now on a fix, the effect will come when the fix ends. This is because the increase in key rates (with the potential for more to come) could mean the beginning of the end of very low-cost mortgage lending. When you are on a roll, you probably have the option to pay over your mortgage.
When you have enough money to do this, you can take advantage of the fact that you now have a lower installment to get overpayed before you have to commit to a higher installment in the near term - but only do so if it is within your reach. However, if you are on a floating or trackers mortgage - where the interest you are paying is tied to the basic interest rates - your mortgage will now be more costly.
A 0.25% increase means about 200 per annum more per 100,000 pounds of mortgage due. According to the Council of Mortgage Lenders, in the first three month of this year around 45% of mortgage owners had floating rates - that is almost every second mortgage creditor. If your fixed-rate transaction comes to an end, if you do not resort to another transaction, it will be reset to your lender's default interest rates (SVR).
The mortgage brokers London & Country estimate that about one third of borrower are on the SVR of their lenders. Usually the SVR of a creditor is a much higher installment than you could get if you had remortgaged (although in the present low interest environments, SVR interest was quite low). An increase in the key interest does not necessarily mean an increase in the SVR as with a floating point or a trackers; the creditor can change it at his own judgement, but the increase is always transferred to the borrower.
When you are on a floating interest rates or trackers, your creditor should contact you to let you know how much the interest increase will impact your payments.